Federal Court of Australia

Bist v Cyan Stone Clydesdale Estate 1 Pty Ltd (No 2) [2024] FCA 1332

ORDERS

THE COURT ORDERS THAT:

1.    The seventh to ninth respondents’ interlocutory application dated 25 October 2024 for indemnity costs and for costs to be payable forthwith be dismissed.

2.    The seventh to ninth respondents pay the costs of that application.

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

REASONS FOR JUDGMENT

JACKMAN J:

1    On 23 September 2024, Kennett J gave judgment on an application for an interlocutory injunction in this matter, which had been heard on 4 September 2024: Bist v Cyan Stone Clydesdale Estate 1 Pty Ltd [2024] FCA 1108. In that judgment, Kennett J dismissed the application for an interlocutory injunction with costs, finding that there was no serious question to be tried and in any event the balance of convenience did not favour the grant of an injunction. The matter has subsequently been allocated to my docket, and I have indicated to the parties that I am aiming to hear the matter between 29 April and 9 May 2025. The matter will come back before me at the end of this week to deal with an application for security for costs and a timetable to prepare the matter for trial.

2    The seventh to ninth respondents seek their costs of the interlocutory injunction application on the indemnity basis and for their costs to be payable forthwith. In light of the fact that the matter has now been allocated to my docket, it is appropriate that I deal with that application rather than referring the matter back to Kennett J for that purpose. In giving these reasons, I assume that the reader is familiar with Kennett J’s judgment, and I adopt the abbreviations and defined terms which his Honour used in those reasons.

3    The seventh to ninth respondents (to which I will refer as the Astro Fort parties) seek indemnity costs on two bases. First, the Astro Fort parties contend that the applicants, properly advised, should have known that they had no chance of success in obtaining an interlocutory injunction such that their lack of prospects should give rise to indemnity costs. I am not persuaded that that ground is established. As I read Kennett J’s reasons, his Honour formed the view that the applicants’ claims were difficult but not hopeless. Indeed, Kennett J expressly stated at [37] that the applicants are not without any prospect of obtaining final relief including some form of order requiring Astro Fort to deal with the land comprising the Clydesdale land in a particular way. My own preliminary view is that the applicants’ claim for an interlocutory injunction based on the tort of unlawful interference with contractual relations may well be more contestable and finely balanced than Kennett J’s reasoning at [32]–[34] appears to suggest, although I have not taken my own preliminary view into account in dealing with this application.

4    In terms of the balance of convenience, the principal basis on which Kennett J formed the view that the balance of convenience did not favour the grant of an injunction concerned the terms of Astro Fort’s financing arrangements. His Honour said at [48] that it was reasonably likely that the making of the orders propounded by the applicants would have catastrophic consequences for Astro Fort (which could not be adequately compensated for by the applicants’ undertaking as to damages) and would be counterproductive from the group members’ point of view. However, the financing arrangements in question were only disclosed to the applicants for the first time at 4.39 pm on 3 September 2024, being the day before the hearing of the interlocutory injunction application. That was done by way of the provision of an unredacted Loan Note Subscription Agreement which was provided to the applicants’ lawyers. Until the provision of that document, the Astro Fort parties’ solicitors had referred only in the most general terms to the existence of financing arrangements that would be impacted by a delay in the sale and the realisation of the proceeds of the sale of the properties (letter of 29 August 2024). That general statement could not reasonably have conveyed to the applicants or their legal advisers that they were doomed to fail on the issue of the balance of convenience.

5    The second basis on which the Astro Fort parties seek indemnity costs is a contention that the applicants unreasonably rejected an offer of compromise. The offer in question was made in the letter of 29 August 2024, in which the Astro Fort parties offered to compromise the application on the basis that the applicants withdraw their application by 2 pm the following day, in which case they would not seek any costs orders in relation to the application. The letter asserted that the applicants’ case was untenable in light of various legal and evidential difficulties. The Astro Fort parties agreed to a request by the applicants that the offer be extended to 5 pm on Monday 2 September 2024 in light of a conference which was anticipated between the applicants and their lawyers.

6    The Astro Fort parties refer to the restatement of the relevant principles concerning the costs consequences of unreasonably rejecting an offer of compromise in Wills v Chief Executive Officer of the Australian Skills Quality Authority (Costs) [2022] FCAFC 43 at [22]–[23] (Logan, Griffiths and Perry JJ), citing Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (No 2) [2018] FCAFC 112 at [7] (Nicholas, Yates and Beach JJ). As those authorities indicate, the relevant circumstances include (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 if the offer were rejected. In my view, the principal difficulty with Astro Fort’s reliance on its offer of 29 August 2024 (which ultimately expired at 5pm on 2 September 2024) is that the evidence of financing arrangements, which ultimately proved to be determinative on the balance of convenience, was not provided until 4.39 pm on 3 September 2024. That evidence included details of the “Threshold Amount” which determined if Astro Fort would meet its financiers’ requirements as to sale price. At least until that evidence was received, it was reasonable for the applicants to reject an offer which represented no more than a “walk away” offer.

7    Accordingly, I reject Astro Fort’s application for indemnity costs on both of the bases which have been advanced.

8    As to the question of the costs of the interlocutory injunction application being payable forthwith, the Astro Fort parties seek a departure from the usual position under r 40.13 of the Federal Court Rules 2011 (Cth) which provides that if an order for costs is made on an interlocutory application, the party in whose favour the order is made must not tax those costs until the proceeding in which the order is made is finished. In the present case, I do not regard any departure from r 40.13 as justified. I have indicated to the parties that I will deal with the final hearing on an expedited basis in about six months’ time. Accordingly, this is not a case where the final determination of the proceeding is far away. Further, there is likely to be substantial overlap between work done for the interlocutory injunction application and work required for the final hearing. If the applicants succeed at the final hearing and obtain an order for costs in their favour, there may be significant difficulties in separating out the costs referable to the interlocutory injunction application from the costs referable to the final hearing. The preferable course is that all costs be assessed at the same time once the proceeding has been finally determined.

Associate:

Dated:    19 November 2024

SCHEDULE OF PARTIES