Federal Court of Australia

Babscay Pty Ltd v Pitcher Partners (No 3) [2021] FCA 156

ORDERS

THE COURT NOTES THAT:

A.    The Applicant’s claim against the Respondent was discontinued pursuant to Orders dated 5 November 2020.

B.    The Respondent’s cross-claims against the Cross-Respondents are discontinued.

C.    The First, Third, Fourth, Sixth, Seventh and Eighth Cross-Respondents' cross-claim against the Applicant is discontinued.

D.    The Second and Fifth Cross-Respondents’ cross-claim against the Applicant is discontinued.

THE COURT ORDERS THAT:

1.    The Applicant and Vannin Capital Operations Ltd pay the Respondent’s costs of and incidental to this proceeding.

2.    The Respondent pay the Cross-Respondents’ costs of and incidental to the cross-claims, including the costs of their respective cross-claims against the Applicant and the costs of the Respondent’s application dated 22 July 2020 (as amended on 28 August 2020), on a party-party basis, to be taxed if not agreed.

3.    The Applicant and Vannin pay to the Respondent a sum equivalent to the sum paid by the Respondent to the Cross-Respondents pursuant to paragraph 2 of these orders.

4.    The parties attend a mediation before a Registrar of the Court at the first available date after 3 March 2021 for the purpose of resolving, if possible, any dispute concerning the quantification of the costs referred to in paragraphs 1 and 2 of these orders.

5.    The Registrar inform the Court of the outcome of the mediation as soon as practical thereafter.

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

REASONS FOR JUDGMENT

ANASATASSIOU J:

Background

1    On 5 November 2020, the Court approved the discontinuance of proceeding VID 1188 of 2017 pursuant to s 33V(1) of the Federal Court of Australia Act 1976 (Cth) and r 26.12(4) of the Federal Court Rules 2011 (Cth): Babscay Pty Ltd v Pitcher Partners [2020] FCA 1610 (Discontinuance Reasons). In the Discontinuance Reasons, I set out the background to, and procedural history of, the proceeding.

2    While I adopt the definitions and abbreviations used in the Discontinuance Reasons in these reasons, I nevertheless set out the following by way of background.

(1)    This proceeding (VID 1188 of 2017) – the Babscay Pitchers Proceeding – was commenced by Babscay pursuant to Part IVA of the Act on its own behalf and on behalf of other persons (Group Members) who acquired an interest in ordinary shares in Slater & Gordon Limited between 24 August 2012 and 19 November 2015 (the Relevant Period) and suffered loss or damage by, or which resulted from, the pleaded conduct of the Respondent (Pitcher Partners), the auditor of Slater & Gordon. The proceeding is funded by Vannin Capital Operations Ltd.

(2)    The Babscay Pitchers Proceeding has been jointly case managed with another representative proceeding (VID 918 of 2018) commenced on behalf of a substantially overlapping class of persons, namely those who acquired an interest in ordinary shares in Slater & Gordon between 30 March 2015 and 24 February 2016. I refer to the related proceeding as the Hall Pitchers Proceeding.

(3)    There were also two earlier related proceedings. The first earlier related proceeding (VID 1213 of 2016) was commenced by Mr Hall on 12 October 2016 and also covered persons who acquired shares in Slater & Gordon in the period between 30 March 2015 and 24 February 2016 (Hall Slater & Gordon Proceeding). The Hall Slater & Gordon Proceeding was conditionally settled in mid-2017, and on 14 December 2017, pursuant to s 33V of the Act, the Court granted approval of a complex settlement, interconnected with a scheme of arrangement that was simultaneously approved under s 411 of the Corporations Act 2001 (Cth). The second earlier related proceeding (VID 659 of 2017) was commenced by Babscay on 20 June 2017 and also covered shareholders who had acquired shares in Slater & Gordon in the period between 24 August 2012 and 19 November 2015 (Babscay Slater & Gordon Proceeding). The Babscay Slater & Gordon Proceeding was, however, stayed immediately following filing in accordance with the settlement and scheme of arrangement in the Hall Slater & Gordon Proceeding.

Costs application

3    By a further amended interlocutory application dated 27 August 2020 (the Costs Application), Pitcher Partners sought, in summary, orders that:

(1)    Babscay and Vannin pay Pitcher Partners’ costs of the Babscay Pitchers Proceeding;

(2)    Babscay and Vannin pay Pitcher Partners’ costs of the interlocutory application;

(3)    Babscay and Vannin pay the costs of the Cross-Respondents joined by Pitcher Partners (the Cross Respondents’ costs), whether directly or indirectly;

(4)    Babscay and Vannin pay Pitcher Partners’ costs on an indemnity basis; and

(5)    the costs be assessed on a lump sum basis pursuant to r 40.02(b) of the Rules.

4    During the course of the hearing, the issues in dispute were narrowed such that only the second, third and fourth issues remained for determination. This is because Babscay and Vannin properly conceded that upon the discontinuance of the Babscay Pitchers Proceeding being approved, they would be liable to pay Pitcher Partners’ costs pursuant to r 26.12(7) of the Rules.

5    In relation to whether costs should be assessed on a lump sum basis or taxed, I propose to refer the quantification of costs generally to a mediation by a Registrar of the Court in the first instance. If the assessment of costs is not resolved at mediation, I will consider whether to determine the method for assessment or leave that question to be determined by a Registrar who may be later appointed to assess and quantify the costs. Accordingly, I shall stand over the question of assessment method until after the mediation.

6    The hearing of the remaining issues in the Costs Application principally involved Babscay, Pitcher Partners and the Cross-Respondents. Vannin had, on 20 August 2020, written to Pitcher Partners confirming that it consented to an order being made directly against it for any costs order the Court may make against Babscay arising from the discontinuance of the proceeding. Accordingly, Vannin did not advance any submissions, instead relying on the submissions of Babscay.

7    Further, by two separate interlocutory applications each dated 22 September 2020, the First, Third, Fourth, Seventh and Eighth Cross-Respondents, as well as the Second and Fifth Cross-Respondents, sought orders that:

(1)    consequent on the discontinuance of its cross-claim in the proceeding, Pitcher Partners pay the costs of the proceeding of each of the Cross-Respondents, to be taxed on the standard basis if not agreed; and

(2)    Pitcher Partners pay the costs of each of the Cross-Respondents of the present application.

8    I note that EY UK, the Ninth Cross-Respondent, did not file a separate interlocutory application in relation to costs. This matter was raised by counsel at a case management hearing on 22 September 2020, at which time I dispensed with the need to do so, on the basis that there was a common understanding that Pitcher Partners would pay EY UK’s costs consequent upon any discontinuance.

9    I also note that the Second and Fifth Cross-Respondents did not appear at the Costs Application, mindful of minimising costs in circumstances where the orders they sought were the same as those sought by the First, Third, Fourth, Sixth, Seventh and Eighth Cross-Respondents. The Second and Fifth Cross-Respondents acknowledged that they were nevertheless bound by any orders made by the Court.

Consideration

10    The power of the Court to award costs is conferred by s 43 of the Act. That power includes a discretion to award costs on an indemnity basis or otherwise: s 43(3)(g) of the Act. The prima facie position in respect of a discontinued proceeding is reflected in r 26.12(7) of the Rules, which provides:

Unless the terms of a consent or an order of the Court provide otherwise, a party who files a notice of discontinuance under subrule (2) is liable to pay the costs of each other party to the proceeding in relation to the claim, or part of the claim, that is discontinued.

[emphasis added]

11    In El-Debel v Secretary, Department of Immigration and Border Protection [2014] FCA 474; 141 ALD 611 at [17], Foster J explained that r 26.12(7) was introduced to reflect:

…a more general policy of the law to the effect that a party should always be permitted to discontinue its proceedings but, in the modern setting, should usually have to pay the costs of the other parties occasioned by the bringing of the proceedings and their subsequent abandonment. This is not to gainsay the broad discretion in respect of costs given to the Court by s 43 of the Federal Court of Australia Act 1976 (Cth). Nonetheless, the Court should give effect to this general policy when making costs orders unless there is some good reason for declining to do so.

12    Accordingly, there was no dispute that Babscay and Vannin should pay Pitcher Partners’ costs under r 26.12(7) of the Rules, consequent upon the discontinuance of the proceeding. There also was no dispute that Pitcher Partners should pay the Cross-Respondents’ costs, including the costs of any cross-claim by a Cross-Respondent. The Cross-Respondents made no claim for costs to be assessed on an indemnity basis as against Pitcher Partners.

13    The contest between the parties in relation to costs was thus narrowed to the following questions:

(1)    whether Babscay and Vannin should be liable for Pitcher Partners’ liability to pay the Cross-Respondents’ costs; and

(2)    whether Babscay and Vannin should pay Pitcher Partners’ costs on an indemnity or party-party basis.

I consider those questions below.

Liability for costs of Cross-Respondents

14    Babscay and Vannin opposed the application that they be liable for the costs of the Cross-Respondents on essentially two grounds. First, they submitted that on the proper construction of r 26.12(7) of the Rules, the phrase ‘each other party to the proceeding’ means each party to the claim and does not include any parties joined by the cross-claim. They contended that weight should be given to the prima facie position that the cost consequences apply only in relation to the parties to the discontinued proceeding when considering whether to impose liability on Babscay and Vannin in relation to the costs of the Cross-Respondents.

15    Similarly, Babscay and Vannin submitted that Pitcher Partners’ claims against the Cross-Respondents constitute separate proceedings which are, by their very nature and terms, capable of surviving independently of the principal proceeding (absent a decision by Pitcher Partners to discontinue their cross-claims): see r 15.11 of the Rules. It followed according to this submission that because Babscay did not sue the Cross-Respondents, they are not ‘parties’ to the Babscay Pitchers Proceeding within the meaning of r 26.12(7).

16    Further, Babscay and Vannin submitted that, having regard to the default position under r 26.12(7), a party seeking a special order for costs upon discontinuance “must persuade the Court that the circumstances justify the displacement of the [default position]”: Armstrong v Australian Community Pharmacy Authority [2012] FCA 577 at [14] (Rares J). Babscay and Vannin submitted that absent any compelling reason for displacing the general policy of the law, Pitcher Partners should bear the costs of the Cross-Respondents as the party which initiated the separate proceeding comprising the cross-claims.

17    Pitcher Partners maintained that the Cross-Respondents were “other parties” to the proceeding and therefore covered by the default position under r 26.12(7). Pitcher Partners submitted that the term “proceeding” comprehends “all the claims and cross-claims which share the same serial number … [such] that any party to those proceedings may be ordered, in exercise of the jurisdiction conferred by s.43, to pay to any other party the latter's costs”: Aristotite v Gladstone Park Shipping Centre Pty Ltd [1984] FCA 175; 2 FCR 334 at [6] (Jenkinson J).

18    Accordingly, Pitcher Partners submitted that the effect of r 26.12(7) is that Babscay and Vannin should pay the costs of the Cross-Respondents because they are other parties to the proceeding and the costs have been incurred “in relation to” the claim being discontinued. In this regard, it was submitted that the words “in relation to” are of wide import, requiring only a relationship or connection between the relevant subject matter which was dependent on the context: Australian Competition & Consumer Commission v The Maritime Union of Australia [2001] FCA 1549; 114 FCR 472 at 487-488 (Hill J).

19    It is unnecessary for me to decide the above question of construction, as even if Babscay and Vannin’s construction is accepted, in my view the prima facie position is not of assistance in deciding whether in the present circumstances they should be liable for the Cross-Respondents’ costs. Further, even if the construction advanced by Babscay and Vannin is correct, r 26.12(7) is subject to any contrary order and thereby expressly provides that the default position may be displaced or varied: see Armstrong at [14] (Rares J).

20    The only other argument of substance was, in effect, that it was unnecessary for Pitcher Partners to have joined the Cross-Respondents and inutile for them to have done so. This contention was put on the basis that, as the claims made against Pitcher Partners were confined to apportionable claims, there was no practical work for the cross-claims to do in limiting Pitcher Partners’ exposure. Indeed, it was submitted that the only claims Babscay brought against Pitcher Partners were to recover the apportionable share of the loss for which Pitcher Partners was responsible.

21    In this respect, Babscay and Vannin noted that under the Scheme of Arrangement approved by Middleton J in the Hall Slater & Gordon Proceeding, there were various releases and indemnities which prevented Babscay from bringing non-apportionable claims against third parties, such as the Cross-Respondents. Accordingly, it was posited that the joinder of the Cross-Respondents was not reasonably warranted and Babscay and Vannin should not be visited with the cost consequences of their joinder.

22    In essence, Babscay and Vannin submitted that the consequences of Pitcher Partners’ choice to file cross-claims ought to lie entirely with Pitcher Partners. This is because Babscay could never recover from Pitcher Partners any more than the share of loss for which Pitcher Partners was responsible, and Pitcher Partners could not bring cross-claims for contribution. It was therefore submitted that Pitcher Partners’ cross-claims were premised on allegations that the Cross-Respondents had wronged Pitcher Partners, and Pitcher Partners should be regarded as having voluntarily initiated those claims.

23    Conversely, Pitcher Partners submitted that Babscay and Vannin should bear ultimate responsibility of the cross-claims for the following reasons. First, Pitcher Partners gave notice of potential cross-claims as early as a case management hearing on 16 November 2017 in the Hall Slater & Gordon Proceeding.

24    Second, the discontinuance of the cross-claims is a consequence of Babscay abandoning the primary claim, not Pitcher Partners’ abandoning the cross-claims. It was submitted, as a matter of principle, that Pitcher Partners ought not bear the costs of other parties to the proceeding given that it was Babscay which persisted with, and then ultimately abandoned, the principal proceeding.

25    Third, Pitcher Partners submitted that under the Scheme of Arrangement, shareholder claimants (including Babscay) are required to indemnify Slater & Gordon and its officers in respect of any claim arising from proceedings such as the present proceeding. Accordingly, an order requiring Babscay and Vannin to pay the costs of the Cross-Respondents is consistent with the indemnity provided for under the Scheme of Arrangement. Pitcher Partners noted that the same consideration weighs in favour of an order that Babscay and Vannin pay the costs of the cross-claim brought against EY UK.

26    Fourth, Pitcher Partners submitted that it was entirely predictable and reasonable that the allegations made by Babscay would result in Pitcher Partners issuing cross-claims against the Cross-Respondents. The allegations against Pitcher Partners related to its audit of Slater & Gordon’s financial statements from FY12 to FY15 and, in circumstances where that audit is predicated on a representation letter provided by the directors of Slater & Gordon, it was expected that there would be a joinder of the Cross-Respondents. The same logic applies in relation to the allegations regarding the acquisition of Quindell PLC, where it was conceivable, if not probable, that Pitcher Partners would join EY UK (as its auditor).

27    Finally, Pitcher Partners rejected the submission that the cross-claims lacked utility. Pitcher Partners referred, in this respect, to the reasons of Middleton J in Babscay Pty Ltd v Pitcher Partners (a firm) [2019] FCA 480 at [76], in which his Honour held, in the context of a summary dismissal application in this proceeding, that “one way or another, the amended cross-claims could raise separate issues to the questions that arise in the apportionment analysis.” That is to say, there was nothing in the proportionate liability provisions to prevent Pitcher Partners from making direct claims against another party: see also Babscay Pty Ltd v Pitcher Partners (a firm) at [77]-[79] (Middleton J).

28    In my view, it was foreseeable, reasonable and prudent for Pitcher Partners to have joined the Cross-Respondents in response to the claims against them by Babscay and to have made direct claims for indemnity from the Cross-Respondents. I have therefore concluded that Babscay and Vannin should pay Pitcher Partners for its liability to pay the costs of the Cross-Respondents. The discontinuance of Pitcher Partners’ cross-claims is a corollary of Babscay’s discontinuance. In this sense, the discontinuance of the cross-claims was “occasioned” by Babscay’s discontinuance of its claims against Pitcher Partners and it is appropriate that an order be made that Babscay and Vannin indemnify Pitcher Partners in respect of their liability to the Cross-Respondents.

29    I accept the submission that the discontinuance of the principal proceeding does not of itself bring an end to the cross-claims. However, I do not accept that Pitcher Partners should pursue the cross-claims to avoid any adverse cost order in favour of the Cross-Respondents. While that may be theoretically possible, it would be inconsistent with the overarching purpose in ss 37M(1) and (2) of the Act – that parties should conduct proceedings with a focus on the real issues in dispute – for Pitcher Partners to continue the cross-claim in order to vindicate its position as to costs. Such a course would require Pitcher Partners to in effect run Babscay’s case against itself; the predicate of which it had denied, for the purpose of establishing an entitlement to apportionment and/or contribution in respect of the principal claim that had been discontinued. This course would require the expenditure of substantial sums, as well as the use of substantial court resources, directed to the vindication of Pitcher Partners’ position as to costs only. In my view, this course would be unreasonable and antithetical to the duty to act consistently with the overarching purpose in s 37N(1) of the Act: see also s 37N(4) of the Act.

30    Thus, while theoretically possible that Pitcher Partners may continue to pursue its claims against the Cross-Respondents under r 15.11 of the Rules, such a course would be unwarranted and contrary to the objective expressed in s 37M of the Act. For these reasons, I reject this contention as a factor relevant to the exercise of my discretion. Alternatively, I give no weight to it when considering whether Babscay and Vannin should indemnify Pitcher Partners in respect of their liability for the costs of the Cross-Respondents.

31    There was some debate about whether there should be an order that Babscay and Vannin pay the Cross-Respondents costs directly or whether Pitcher Partners should pay the costs of the Cross-Respondents and recover those costs by way of an indemnity from Babscay and Vannin. This issue was resolved by the parties during the hearing of the application in favour of the latter approach. Accordingly, orders will be made in those terms.

Indemnity costs

32    The only outstanding issue is whether Babscay and Vannin should pay Pitcher Partners’ costs on an indemnity basis. The principles applicable to the award of indemnity costs were conveniently summarised in Ngarluma Aboriginal Corporation RNTBC v State of Western Australia [2013] FCA 946 at [17]-[24] (Gilmour J):

The jurisdiction of the Court to award costs is conferred by s 43 of the Federal Court of Australia Act 1976 (Cth) (the FCA Act). The Court has a wide discretion, although it requires to be exercised judicially and in accordance with established principle. It includes the power to order that costs awarded against a party are to be assessed on an indemnity basis. This is as enacted by s 43(3)(g) of the FCA Act.

It is, equally, well established that whilst the categories of cases in which indemnity costs might be ordered are not closed, it is necessary for there to be “some special or unusual feature in the case to justify the court departing from the ordinary practice”: Alpine Hardwood (Aust) Pty Ltd v Hardys Pty Ltd (No 2) (2002) 190 ALR 121 at [11] citing Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233. Under the general law, however, indemnity costs will not be ordered unless some harm has been inflicted on the NAC and it can be demonstrated that that harm has flowed from some deliberate and unwarranted decision or action of the party against whom the award is sought: Australian Transport Insurance Pty Ltd v Graeme Phillips Road Transport Insurance Pty Ltd (1986) 10 FCR 177 at 178.

Justice Tracey in Camm v Linke Nominees Pty Ltd (No 4) [2013] FCA 223 at [52] observed, correctly, that the general law principles concerning the Court’s discretion to award costs, have been modified by the enactment of ss 37M and 37N of the FCA Act. This will include the Court’s discretion to award indemnity costs.

Section 37M(1) of the FCA Act provides that the overarching purpose of the “civil practice and procedure provisions” (defined in s 37M(4)(a) to include Rules of Court made under the FCA Act) is to facilitate the just resolution of disputes:

(a)    according to law; and

(b)    as quickly, inexpensively and efficiently as possible.

Section 37M(2) provides for specific objectives of that overarching purpose.

Section 37M(3) of the FCA Act provides that “the civil practice and procedure provisions must be interpreted and applied, and any power conferred or duty imposed by them (including the power to make Rules of Court) must be exercised or carried out, in the way that best promotes the overarching purpose”.

Section 37N of the FCA Act relevantly provides that:

(1)    The parties to a civil proceeding before the Court must conduct the proceeding (including negotiations for settlement of the dispute to which the proceeding relates) in a way that is consistent with the overarching purpose.

(2)    A party's lawyer must, in the conduct of a civil proceeding before the Court (including negotiations for settlement) on the party's behalf:

(a)    take account of the duty imposed on the party by subsection (1); and

(b)    assist the party to comply with the duty.

….

(4)    In exercising the discretion to award costs in a civil proceeding, the Court or a Judge must take account of any failure to comply with the duty imposed by subsection (1) or (2).

In Camm (No 4) at [54], Tracey J held that:

[54]    When read together, ss 37M and 37N provide for the making of costs orders against a party or a party’s legal practitioner even where the obligations imposed by 37N have not led another party to incur loss or damage. One element of the overarching purpose is “the efficient use of the judicial and administrative resources available for the purposes of the Court”. Another is “the efficient disposal of the Court’s overall caseload”. Conduct on the part of a litigant or a practitioner which impacts adversely on the pursuit of these purposes may be taken into account when costs are awarded.

33    The remarks of the Full Court in Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd (No 2) [2017] FCAFC 116 at [5] (Jagot, Yates and Murphy JJ) are also apposite:

In broad terms an order for indemnity costs requires that some special or unusual feature arises: Cirillo v Consolidated Press Property Ltd (formerly known as Citicorp Australia Ltd) (No 2) [2007] FCA 179 at [3] (Finn J). Indemnity costs are not punitive but are designed for “compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the Court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs”: Hamod v New South Wales (2002) 188 ALR 659 at 665 (Gray J, with whom Carr and Goldberg JJ agreed). Such circumstances may include where allegations are made “which ought never to have been made”, where the case is “unduly prolonged by groundless contentions” (Ragata Developments Pty Ltd v Westpac Banking Corporation [1993] FCA 115 at [15], [17] (Davies J)), and where “the applicant, properly advised, should have known that he had no chance of success” (Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401 (Woodward J)) or “persists in what should on proper consideration be seen to be a hopeless case” (J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (WA Branch) (No 2) (1993) 46 IR 301 at 303 (French J)).

34    Pitcher Partners properly conceded that the only basis for indemnity costs was that the decision to discontinue the Babscay Pitchers Proceeding could, and should, have been made earlier. In this respect, the necessary "special or unusual feature" to justify an order for indemnity costs is a delinquency in respect of how the case was conducted, specifically that Babscay unduly delayed and prolonged the proceeding.

35    Pitcher Partners referred to authority in which indemnity costs have been awarded in circumstances where:

(1)    an unsuccessful party prolonged litigation by, among other things, multiplying allegation upon allegation, thereby causing the other parties to incur costs far beyond what they could have reasonably expected to incur in litigation of the genuine issues: Ragata Developments Pty Ltd v Westpac Banking Corporation [1993] FCA 115; 217 ALR 175 at [9] (Davies J); and

(2)    allegations were made that ought to never have been made and the matter was unduly prolonged through groundless contentions: Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 801; 46 FCR 225 at [24] (Sheppard J).

36    In support of its position, Pitcher Partners submitted that Babscay’s choice to adopt a wide, "scattergun" approach to pleadings subjected all parties to unnecessary costs, beyond what they could reasonably have expected to incur in litigation of the genuine issues. This approach, it was submitted, is inconsistent with the overarching purpose of the Act, namely to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. Accordingly, Pitcher Partners submitted that an award of indemnity costs is justified: see ss 37M, 37N(4) and 37P(6)(d) and (e) of the Act.

37    In this respect, Pitcher Partners submitted that the only utility in the Babscay Pitchers Proceeding was to pursue claims that were not already being litigated as part of the Hall Pitchers Proceeding. Pitcher Partners’ submission went no further than to submit that if Babscay properly and thoroughly analysed its prospects in respect of such claims, and obtained expert advice at an earlier time, it would have been in a position to discontinue the proceeding much sooner.

38    While that may be so, in my view it is not a sufficient basis to impose the sanction of indemnity costs. Parties are to be encouraged to assess and reassess the merits of their claims throughout the progress of the proceeding, before, during and after the final hearing. Without more, parties should not be deterred from making the often difficult decision to abandon a claim in whole or in part by the prospect of being thereby exposed to costs assessed on an indemnity basis. In this regard, I also note that the decision to discontinue the proceeding was made after review of the proceeding by solicitors and counsel who were retained some time after the proceeding was issued.

39    In my view, for the reasons given above, this is not an appropriate case in which to order indemnity costs.

Disposition

40    I have decided that the Costs Application should be determined as follows. Consequent upon the discontinuance of the Babscay Pitchers Proceeding, Babscay and Vannin pay the costs Pitcher Partners for their liability to pay the Cross-Respondents costs on a party-party basis. Babscay and Vannin should also pay the costs of the present interlocutory applications filed by Pitcher Partners and the Cross-Respondents.

41    I shall also order that the proceeding be referred to a mediation before a Registrar of the Court at the first available date after 3 March 2021 in relation to the assessment of costs generally. If the assessment cannot be resolved at mediation, the proceeding shall be listed on a date to be fixed following the mediation to determine any outstanding dispute concerning the quantification of costs, including whether costs should be assessed on a lump sum basis or taxed on a party-party basis.

Associate:

Dated:    3 March 2021

SCHEDULE OF PARTIES