Federal Court of Australia

Corbisieri v NM Superannuation Proprietary Limited (No 2) [2023] FCA 1531

ORDERS

THE COURT ORDERS THAT:

1.    The second respondent pay the applicant’s costs of the proceeding on a party/party basis, to be taxed if not agreed.

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

REASONS FOR JUDGMENT

O’CALLAGHAN J

Introduction

1    This proceeding concerned an appeal on a question of law pursuant to s 1057 of the Corporations Act 2001 (Cth) brought by Rosaria Corbisieri, as executrix of the Will of her late son, Pino Corbisiero, against a decision made by the second respondent, the Australian Financial Complaints Authority Limited (AFCA). AFCA determined that the entire amount of a death benefit of $1.122m payable pursuant to the terms of a policy of insurance between Mr Corbisiero and the first respondent be paid to the second respondent, who was in a de facto relationship with Mr Corbisiero, and in whose favour Mr Corbisiero had made a “Non-Lapsing Binding Nomination” dated 6 December 2018 to pay that sum to him.

2    On 2 November 2023, I made the following orders:

1.    The appeal is allowed.

2.    Pursuant to s 1057(4)(a) of the Corporations Act 2001 (Cth), the determination of Australian Financial Complaints Authority Limited (AFCA) in case number 871726 is set aside.

3.    Pursuant to s 1057(4)(b) of the Corporations Act 2001 (Cth), the complaint made by the second respondent is remitted to AFCA to be determined again in accordance with these reasons.

4.    The parties are to file submissions as to costs, not exceeding three pages, within seven days of the publication of these reasons, if the question of costs is not agreed.

5.    If there is no agreement, the costs of the appeal will be determined on the papers.

See Corbisieri v NM Superannuation Proprietary Limited [2023] FCA 1319.

3    The parties did not agree about the costs question, and I proceeded to determine the matter on the papers. These are my reasons.

Costs principles

4    The relevant principles with respect to the award of costs by the court under s 43 of the Federal Court of Australia Act 1976 (Cth) are well known.  The power to award costs is discretionary, but must be exercised judicially by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation. See, by way of example only, Northern Territory v Sangare (2019) 265 CLR 164 at 172 [24] (Kiefel CJ, Bell, Gageler, Keane and Nettle JJ). 

5    The purpose of a costs order is to compensate the successful party, not to punish the unsuccessful party. See Latoudis v Casey (1990) 170 CLR 534 at 543 (Mason CJ), 563 (Toohey J) and 567 (McHugh J). 

6    The circumstances in which indemnity costs may be awarded are not rigid or closed, but such award is usually attended by special circumstances which justify departing from the ordinary costs position, based on particular facts and circumstances of the case. See Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 232-33 (Sheppard J).  To justify a special costs order, there must be conduct by a party deserving of criticism and resulting in greater expense to the innocent party. See Clifton v Kerry J Investment Pty Ltd (No 2) (2020) 277 FCR 382 at 389 [31] (Besanko, Markovic and Banks-Smith JJ).

7    An unreasonable rejection (at the time of the offer) of an offer of genuine compromise may cause the court to order costs on an indemnity basis, having regard to all relevant considerations. See Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435 at 442 [25] (Warren CJ, Maxwell P and Harper AJA) (Hazeldene). 

8    That an unsuccessful party received and rejected an offer to settle on terms more favourable than it eventually achieved at trial does not, of itself, warrant an order for indemnity costs. The rejection must have been unreasonable in all the circumstances.  In Hazeldene, the Court observed at 442 [25] that the circumstances to be taken into account in determining whether rejection of an offer was unreasonable cannot be stated exhaustively but may include, for example:

(a)    the stage of the proceeding at which the offer was received;

(b)    the time allowed to the offeree to consider the offer;

(c)    the extent of the compromise offered;

(d)    the offeree’s prospects of success, assessed as at the date of the offer;

(e)    the clarity with which the terms of the offer were expressed; and

(f)    whether the offer foreshadowed an application for indemnity costs in the event of the offeree rejecting it.

See also Anchorage Capital Partners Pty Ltd v Acpa Pty Ltd (No 2) [2018] FCAFC 112 at [7] (Nicholas, Yates and Beach JJ).

Calderbank offer

9    On 2 October 2023, the applicant made a Calderbank offer to the second respondent to settle the proceeding. That offer was in the following terms:

1.    [The applicant] will discontinue the superannuation proceeding with no order as to costs with all the superannuation death benefits being paid to the estate and each of our respective clients bear their own costs associated with the superannuation proceeding, including all costs incurred in relation to the BDBN, the AMP decisions, the Stay Proceedings and the AFCA determination;

2.    [The second respondent] will discontinue the Part IV proceeding with no order as to costs with the matter to be finalised on the basis that the net estate be divided as to 50% each of our clients; and

3.    Our respective client’s costs associated with the Part IV proceeding be paid from the estate on a standard basis, to be taxed in default of agreement …

10    The offer remained open for acceptance until 4:00pm on 9 October 2023.

11    The reference in the letter to “the Part IV proceeding” is a reference to a proceeding apparently brought by the second respondent in the Supreme Court of Victoria, pursuant to Part IV of the Administration and Probate Act 1958 (Vic), the detail of which was not the subject of any evidence.

12    Although there is no evidence about it, counsel’s written submissions stated that the second respondent rejected the offer in writing on 9 October 2023, and I proceed accordingly.

Submissions

13    The applicant submitted that the second respondent pay her costs on a standard basis until 2 October 2023, and thereafter on an indemnity basis, because the “[s]econd [r]espondent’s stance was unreasonable and, as recogni[s]ed in [Charan v Nationwide News Pty Ltd [2018] VSC 89], the [a]pplicant’s Calderbank offer was designed to settle that stance” and the “[Hazeldene] factors overwhelmingly favour the [applicant]”.

14    The applicant alternatively submitted that the second respondent pay her costs on a standard basis.

15    The second respondent submitted that AFCA pay the applicant’s costs and the second respondent’s costs, or alternatively that AFCA pay the applicant’s costs. The second respondent’s submissions are relevantly as follows:

Were the matter amenable to an Appeal costs Indemnity Certificate under the Federal Proceedings (Costs) Act 1981, the second respondent would apply for such a certificate. The Act permits certificates to be granted in relation to appeals from the Administrative Appeals Tribunal. The present appeal is of the same character. That demonstrates statutory recognition that the costs of appeals of the type presented by the present appeal, ought not be borne by the unsuccessful parties, but by the state. The present matter does not appear to fall within the definition of a ‘Federal Appeal’ under that Act, albeit being of the same character of AAT appeals. However, it is appropriate that the entity which is in the same position as the state if this were an AAT decision, ought to bear the costs of the parties.

…

The third respondent, having made an erroneous decision, ought bear the parties’ costs of dealing with the consequences of that decision.

At the very least, the applicant has been successful in setting aside the AFCA decision. AFCA is the actual decision-maker respondent to the appeal, and ought to be treated as the losing party. AFCA ought to pay any costs ordered in favour of the applicant, without there being any order of costs against the third respondent.

16    The second respondent alternatively submitted that the parties bear their own costs.

17    The third respondent submitted that there be no order for costs as between it and either or both of the applicant or second respondent. It submitted that it did not adopt a position on the merits of the grounds of the appeal or participate in the hearing of the appeal, in accordance with the well-established principles (see R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13 at 35-36 (Gibbs, Stephen, Mason, Aickin and Wilson JJ)).

Consideration

18    Here, the time allowed to consider the offer was sufficient, the terms in with which the offer was expressed were clear, and that the offer properly foreshadowed an application for indemnity costs.

19    However, the applicant’s Calderbank offer to settle the superannuation proceeding in the Federal Court was bound up with a reciprocal offer that the second respondent to discontinue the Part IV proceeding in the Supreme Court of Victoria.

20    I was not told anything about the nature or scope of that Part IV proceeding. I therefore cannot determine whether the second respondent’s rejection of the “combined” offer was unreasonable, so as to warrant a departure from the ordinary costs position.

21    I reject the applicant’s primary submission that the second respondent pay her costs on a standard basis until 2 October 2023, and thereafter on an indemnity basis.

22    I also reject the second respondent’s submissions that AFCA pay the applicant’s costs and the second respondent’s costs, or alternatively the applicant’s costs.

23    His submissions about the potential application of the Federal Proceedings (Costs) Act 1981 (Cth) need only be stated to be rejected. He correctly conceded that the “present matter does not appear to fall within the definition of ‘Federal Appeal’ under that Act”, yet submitted that “it is appropriate that the entity [AFCA] which is in the same position as the state if this were an AAT decision, ought bear the costs of the parties”.

24    It is well-established that the ordinary position that costs follow the event does not apply where a respondent tribunal does not oppose an appeal from its decision. See, by way of example only, MS PD v Registrar of the Federal Court of Australia (No 2) [2020] FCA 1665 at [11]-[14] (Logan J).

25    As Wilcox J explained in Our Town FM Pty Ltd v Australian Broadcasting Tribunal (No 3) [1987] FCA 675; (1987) 77 ALR 609 at 612, “[i]t seems … somewhat hard for the courts at one time to tell the tribunal that it should not actively intervene to defend its decisions and, at the same time, to order the tribunal to pay costs if, without having had an opportunity of defending a decision, the decision is held to be bad in law”.

Disposition

26    It follows that the appropriate order in the circumstances is that the second respondent pay the applicant’s costs on a party/party basis, to be taxed if not agreed.

Associate:    

Dated:    5 December 2023