Federal Court of Australia

Dispute Resolution Associates Pty Ltd v Selth (No 3) [2020] FCA 1554

ORDERS

THE COURT ORDERS THAT:

1.    The first applicant and the second applicant pay the second respondent’s costs of and incidental to the proceedings on a party-party basis from 5 September 2019 up to and including today’s date (other than costs of and incidental to the interlocutory application filed on 25 May 2020).

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

REASONS FOR JUDGMENT

COLLIER J:

1    On 17 June 2020, in Dispute Resolution Associates Pty Ltd v Selth (No 2) [2020] FCA 844 (primary judgment), I dismissed an application by the applicants for extension of time and leave to appeal (leave application) from a decision of this Court in Minus v Selth (No 2) [2017] FCA 1233. Relevant facts are summarised in my earlier decision at [2]-[73], and it is unnecessary for me to repeat them here. Materially, I note that the applicants were successful in respect of their interlocutory application filed on 12 September 2019, seeking reinstatement of the proceedings (reinstatement application), in that on 4 June 2020 I ordered that the proceedings be reinstated.

2    Determination of appropriate orders relating to the costs of and incidental to the dismissed application for extension of time and leave to appeal remains an outstanding issue.

3    On 2 June 2020 in Dispute Resolution Associates Pty Ltd v Selth [2020] FCA 753, I dismissed the interlocutory application filed on 25 May 2020 referable to substitution of the first respondent (substitution application). It follows that there is no first respondent in a position to seek, or oppose, costs.

4    By email dated 1 July 2020 from the second respondent to Chambers, and copied to Mr Minus, Mr Bridges for the second respondent informed the Court as follows:

We refer to the orders made by her Honour on 17 June 2020.

The Second Respondent seeks case management orders in the form attached in relation to the question of costs.

Mr Minus has advised us that the First Applicant and Second Applicant:

1.    Consents to order 1 of the proposed orders.

2.    Requires an oral hearing regarding costs.

3.    Requires that Mr Selth’s replacement appear.

The Second Respondent opposes orders 2 and 3 above sought by the First and Second Applicant.

5    Attached to this email were the following draft orders proposed by the second respondent:

THE COURT ORDERS THAT:

1.    The parties file and serve any written submissions on the issue of costs by 4:00pm on 8 July 2020 (not exceeding five pages in length).

  2.    The issue of costs be determined on the papers.

6    In circumstances where the applicants did not dispute the timing of submissions being filed, but sought an oral hearing, on 2 July 2020 I made the following case management orders:

1.    The parties file and serve any written submissions on the issue of costs by 4.00 pm on 8 July 2020 (not exceeding five pages in length).

2.    The matter be listed for a hearing in respect of costs for half a day at 10.15 am on 22 October 2020

7    Only the second respondent has filed submissions in respect of costs. In summary, the second respondent submits:

    The second respondent was successful in the primary judgment in opposing the leave application.

    As the successful party, the second respondent is entitled to its costs unless there is a good reason to displace the usual rule. There is no good reason in this case.

    Although the applicants were successful in respect of the reinstatement application (notwithstanding the opposition of the second respondent), this was on the basis that reinstatement was an efficient and cost-effective way forward to progress the proceedings in relation to the extension application. There was no indication by the Court that the opposition was without merit.

    In any event, the success of the applicants in respect of the reinstatement application was distinguishable from proceedings where parties have partial successes on distinct or separate issues. The reinstatement application and the leave application were heard together, and preparation and arguments for each was inextricable.

    It would work an injustice on the second respondent if it were required to relinquish a portion of its costs in meeting the applicants’ case.

    The appropriate order is that the applicants pay the second respondent’s costs of and incidental to the proceedings on a party-party basis from 5 September 2019 up to and including date of judgment on costs (other than costs of and incidental to the substitution application).

8    At the hearing today, Mr Minus submitted that he did not have an opportunity to file submissions. I do not accept this submission in light of correspondence copied to Mr Minus, and Orders made by the Court (Order 1 being made with the applicants’ apparent consent) on 2 July 2020.

9    Mr Minus further submitted that no costs order should be made against the second applicant as the second applicant was not an active party to original proceedings commenced in 2013 before Greenwood J relating to substantive issues in this case.

10    It is well settled that the power of the Court to award costs pursuant to s 43 of the Federal Court of Australia Act 1976 (Cth) is discretionary. However, as a general rule, costs follow the event: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11, Northern Territory v Sangare (2019) 265 CLR 164; [2019] HCA 25, Umoona Tjutagku Health Service Aboriginal Corporation v Walsh (2019) 268 FCR 401; [2019] FCAFC 32. This is not an iron-clad rule – as the Full Court observed in Umoona:

42.    Thus, while the ordinary rule is that the successful party will receive her or his costs, that is not an absolute rule: Oshlack at [40] (Gaudron and Gummow JJ); Ruddock v Vadarlis (No 2) [2001] FCA 1865; (2001) 115 FCR 229 (Ruddock) at 234-235 (Black CJ and French J). As the Full Court explained in Queensland North Australia Pty Ltd v Takeovers Panel (No 2) [2015] FCAFC 128; (2015) 236 FCR 370 at [11], after referring to the decisions in Ruddock and Victoria v Sportsbet Pty Ltd (No 2) [2012] FCAFC 174 with approval:

11.     These decisions treat the success or failure of the relevant party as being the starting point in consideration of the question of costs. However they contemplate at least three distinct categories of situation in which a successful party might be deprived of costs, or even ordered to pay the costs of the other side. One such category is where the applicant has been only partially successful in that it has not obtained all of the relief sought. The second category is where a party has succeeded in obtaining the relief sought, but has not succeeded on all bases (factual or legal) upon which it sought such relief. Of course, it is possible that a particular outcome will fall into both categories. A third category involves consideration of the successful party’s conduct of the case.

43.    As this passage explains, in determining whether to apply the ordinary rule, the Court may have regard not merely to the extent of success vis a vis different causes of action, but also to the extent of success vis a vis different factual and legal issues. The appellants’ submission to the contrary must therefore be rejected.

44.    To put it another way, it is correct to say that what amounts to success is not always revealed merely by reading the orders of the court. As the Western Australian Court of Appeal explained in Frigger v Professional Services of Australia Pty Ltd (No 2) [2011] WASCA 103 (S) (Frigger):

12.     ... Where an appellant has been successful in obtaining what is, in effect, a variation in their favour of orders below, there may remain valid reasons to not award costs in favour of the appellant where the appellant has not been successful in the underlying, real contest: Laws v Australian Broadcasting Tribunal (1989) ALD 522; (1989) 85 ALR 659, 677. Where appellants have only won a nominal victory then the court may not award costs. Success in proceedings is to be determined by the “reality” of the circumstances involved: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 [70] (McHugh J); Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 WLR 394, 401.

45.    The breadth of the discretion as to costs is reflected among other things in s 43(3)(c) and (e) of the FCA Act which respectively permit the Court to make orders that the parties bear costs in specified proportions and to award costs in favour of or against a party irrespective of whether the party is successful in the proceeding: see also Oshlack at [40]. Thus, as the High Court held in Gray v Richards (No 2) [2014] HCA 47; (2014) 89 ALJR 113:

2.    The disposition of costs is within the general discretion of the Court. Ordinarily, that discretion will be exercised so that costs are awarded to the successful party, but other factors may have a significant claim on the discretion of the Court. The disposition which is ultimately to be made in any case where there are competing considerations will reflect a broad evaluative judgment of what justice requires.

(emphasis added; citations omitted)

46.    The interests of justice include considerations of the cost-effectiveness of litigation. Thus a court may conclude that a departure from the general rule is warranted where substantial issues are raised by the successful party which unduly extend the time and expense of litigation: A, DC v Prince Alfred College Inc (No 2) [2016] SASCFC 27 at [6]- [11] (the Court). As counsel for Ms Walsh pointed out, the relevance of such considerations is highlighted by the obligation imposed upon a party and a party’s lawyer by subss 37N(1) and (2) respectively of the FCA Act to conduct proceedings in a way that is consistent with the overarching purpose in s 37M, namely, to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible.

(Emphasis added.)

11    In this case, I consider that there are no reasons to order other than that costs should follow the event.

12    This is not a case where:

    the second respondent has not succeeded on all bases (factual or legal) upon which it opposed relief sought by the applicants; or

    the conduct of the second respondent’s case was such as to be relevant to a costs order.

13    To the extent that the second respondent unsuccessfully opposed the applicants’ application for reinstatement, I accept the submission of the second respondent that its submissions opposing reinstatement were inextricably linked with its opposition to the leave application. Indeed, I note from the written submissions of the second respondent, filed on 3 March 2020, that the only submissions made in respect of reinstatement in an otherwise relatively length document were:

7.    The Reinstatement Application seeks the reinstatement of an application for the extension of time to apply for leave to appeal under Rule 35.14 of the Federal Court Rules 2011 (Cth) (FC Rules) and for leave to appeal under Rule 35.11 of the FC Rules (ie., the Leave Application). The discretion of the Court in Rule 35.14 of the FC Rules is to be exercised in accordance with settled principles: the Court must be satisfied that to refuse to extend time would work an injustice; the merits of the proposed application for leave to appeal are a relevant consideration; the applicant bears the onus: Gallo v Dawson (1990) 64 ALJR 458 (Gallo v Dawson) at 458-459. The merits of the proposed application for leave to appeal under Rule 35.11 are to be assessed by reference to the settled principles: viz., whether, in all the circumstances, the decision is attended with sufficient doubt to warrant its being reconsidered, and whether substantial injustice would result if leave were refused, supposing the decision to be wrong.

D.    SUBMISSIONS

8.    The Reinstatement Application should be dismissed. The Applicants have not established that the Leave Application has any prospects of success; that is, that it would work an injustice to the applicants to refuse to extend time to apply for leave to appeal for Logan J’s orders. Therefore, to reinstate the Leave Application would be futile.

14    Insofar as I can ascertain, the applicants filed no submissions specifically addressing the issue of reinstatement. To that extent, it appears that the applicants too considered that the questions of reinstatement and extension of time and leave to appeal were intertwined, at least in respect of preparation of their case and contentions to be put to the Court.

15    The issue of reinstatement of the proceedings was determined by me on 4 June 2020 in circumstances where, on 14 March 2019, I granted the applicants leave to apply to reinstate the proceedings in the event Mr Minus was granted leave to manage the applicants. That leave to manage was granted by Jagot J on 5 September 2019. As the second respondent correctly submitted, my determination that the proceedings be reinstated was pragmatic, and did not mean that the arguments of the second respondent opposing reinstatement lacked merit.

16    In my view it is unnecessary, and would be unjust, in the circumstances to order that there be an abatement of costs to which the second respondent is otherwise entitled by reference to the reinstatement application.

17    In relation to the applicants’ submission that the second applicant ought not be the subject of a costs order – I reject that submission. That the second applicant was not an active party to the original proceedings before Greenwood J relating to substantive issues in this case is irrelevant. The second applicant was a party to the reinstatement application and the leave application before me in respect of which it was unsuccessful. Costs can and should be ordered against it.

18    The second respondent has sought costs on a party-party basis from 5 September 2019 up to and including the date of today’s judgment. In my view this is reasonable, and I so order.

Associate:

Dated: 23 October 2020