Federal Court of Australia

Australian Securities and Investments Commission v iSignthis Limited (Costs) [2025] FCA 1667

ORDERS

THE COURT ORDERS THAT:

1.    Subject to paragraph 2 of these orders, the defendants pay the plaintiff’s costs of and incidental to the proceeding to be taxed if not agreed.

2.    There be no order as to the costs of the defendants’ interlocutory application dated 31 October 2024.

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

REASONS FOR JUDGMENT

MCEVOY J:

1    On 21 June 2024 I delivered judgment on liability in this proceeding: Australian Securities and Investments Commission v iSignthis Limited [2024] FCA 669 (Liability Judgment). For the reasons outlined in the Liability Judgment I determined that iSignthis (now Southern Cross Payments Ltd) had engaged in conduct in contravention of ss 104H and 674(2) of the Corporations Act 2001 (Cth), and that its former chief executive officer and managing director, Mr Nickolas John Karantzis, had contravened ss 180(1), 1309(2), 1309(12) and 674(2A) of the Corporations Act by reason of his involvement in iSignthis’ contraventions of s 674(2) of that Act. On 26 July 2024, I made declarations of contravention of civil penalty provisions by iSignthis and Mr Karantzis which gave effect to these findings.

2    On 8 August 2025 I delivered judgment on penalty: Australian Securities and Investments Commision v iSignthis Limited (Penalty) [2025] FCA 917 (Penalty Judgment). For the reasons outlined in the Penalty Judgment I determined that the company was required to pay a pecuniary penalty of $10 million, and that Mr Karantzis was required to pay a pecuniary penalty of $1 million. I also determined that Mr Karantzis should be disqualified from managing corporations for a period of six years.

3    This judgment concerns the costs of the proceeding. It should be read together with the Liability and Penalty Judgments, and the abbreviations and defined terms employed in those judgments are adopted here.

4    Predictably, the parties are apart on the question of costs. Unremarkably, ASIC seeks orders that its costs be paid by the defendants, and that such costs be assessed on a lump sum basis pursuant to r 40.02(b) of the Federal Court Rules 2011 (Cth). ASIC relies upon written submissions dated 5 September 2025 and reply submissions dated 19 September 2025.

5    The defendants appear to accept that they should pay a portion of ASIC’s costs. They seek, however, an apportionment of costs by reference to those issues on which ASIC succeeded, and those on which ASIC failed. They seek also for costs to be assessed by way of taxation. The defendants also rely upon written submissions dated 5 September 2025 and reply submissions dated 19 September 2025.

6    For the reasons that follow I have determined that there is no reason in this case to depart from the ordinary position that costs are to follow the event. The defendants should pay ASIC’s costs of and incidental to the proceeding, save that there should be no order as to the costs of the defendant’s interlocutory application dated 31 October 2024.

Relevant principles

7    Pursuant to s 43(2) of the Federal Court of Australia Act 1976 (Cth), the court has a general discretion to award costs. Axiomatically, costs will ordinarily follow the event, and a successful litigant will receive its costs unless there are “special circumstances” that would justify a different order: Oshlack v Richmond River Council (1998) 193 CLR 72 at [35] (Gaudron and Gummow JJ), [66]-[67] (McHugh J), [134] (Kirby J) (Oshlack); Foots v Southern Cross Mine Management Pty Ltd (2007) 234 CLR 52 at [25] (Gleeson CJ, Gummow, Hayne and Crennan JJ); Northern Territory v Sangare (2019) 265 CLR 164 at [25] (Kiefel CJ, Bell, Gageler, Keane and Nettle JJ).

8    Where a litigant is successful on only a portion of its claim, the circumstances may make it reasonable that that litigant bear the expense of litigating the portion of its claim on which it failed. A successful party who has failed on certain issues may not only be deprived of the costs of those issues, but may be ordered to pay the other party’s costs in relation to them. On the other hand, justice may not be served if parties are dissuaded, by the risk of an adverse costs order, from canvassing all issues that might reasonably be raised in the conduct of a proceeding: see Roadshow Films Pty Ltd v iiNet (No 2) [2011] FCAFC 82 at [3], [10] (Emmett, Jagot and Nicholas JJ); Tramanco Pty Ltd v BPW Transpec Pty Ltd (No 2) [2014] FCAFC 58 at [2] (Allsop CJ, Greenwood and Nicholas JJ); Ezy-Fit Engineering Group Pty Limited v Microm Nominees Pty Limited (No 4) [2025] FCA 411 at [36] (Banks-Smith J).

9    Nonetheless, an order apportioning costs is an “exceptional measure”: Oshlack at [66], citing Smeaton Hanscomb & Co Ltd v Setty (Sassoon I), Son & Co (No 2) [1953] 1 WLR 1481 at 1484 (Devlin J). It is well-established that the court should be reluctant to undertake an enquiry as to an apportionment of costs against a successful party on an issue by issue basis. The relevant authorities in this regard were recently essayed by Horan J in Save Our Strathbogie Forest Inc v Secretary to the Department of Energy, Environment and Climate Action (No 2) [2024] FCA 430 at [8]-[12].

10    The applicable general principle regarding the apportionment of costs was explained by Goldberg J in Dr Martens v Figgins Holdings (No 2) [2000] FCA 602 at [54] (Dr Martens) in the following terms:

[A] court should be reluctant to embrace the proposition that, as a general rule, it is appropriate to undertake an enquiry as to who was successful in relation to particular issues in a case to determine whether there should be an apportionment of costs against a successful party. A court should not be too ready to disallow costs simply because a party has failed upon an issue, unless it be quite a separate and distinct issue from the issues in respect of which it succeeded or unless there be some element of unreasonableness or inappropriate conduct in relation to that issue.

11    ASIC submits correctly that in considering whether to make an order which deprives a party of the costs of an issue on which they were unsuccessful, it is appropriate for the court to consider the following matters. The relative merits or strengths of the lost issue or inquiry; whether the length of the proceeding was greatly increased by the lost issue or inquiry; whether the issue was of sufficient significance in proportion to the whole case to warrant such an order; whether the issue and the evidence adduced in respect of it overlapped with issues on which the party was successful, and whether it was reasonable to agitate the issue in any event: see BHP Billiton Iron Ore Pty Ltd v National Competition Council (No 2) [2007] FCA 557 at [23] (Middleton J) (BHP (No 2)); NV Sumatra Tobacco Trading Co v British American Tobacco Services Ltd [2011] FCA 1295 at [17] (Greenwood J) (NV Sumatra Tobacco).

12    The court should not place undue analysis upon whether a successful party has been unsuccessful on “particular issues” in the context of its predominant success in the controversy overall, and will be reluctant to adopt an approach of apportioning costs between different issues depending on success or failure on those issues where it is likely to be difficult, if not impossible, to allocate items of costs between the different issues: NV Sumatra Tobacco at [17]; PKT Technologies Pty Ltd v Peter Vogel Instruments Pty Ltd (No 2) [2020] FCAFC 46 at [15] (Besanko, Banks-Smith and Stewart JJ).

13    Further, if apportionment of costs is appropriate in the circumstances of a case, the object of apportionment is not mathematical precision but a result that best reflects the interests of justice in the overall circumstances of this case: EMI Songs Australia Pty Limited v Larrikin Music Publishing Pty Ltd [2011] FCAFC 92 at [9] (Emmett, Jagot and Nicholas JJ) (EMI Songs) citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272 (Gummow, French and Hill JJ).

The PARTIES’ POSITIONs

The costs of the proceeding

14    As has been mentioned, ASIC seeks an order that the defendants pay its costs of the proceeding in circumstances where it was substantially successful at both the liability and penalty stages.

15    The defendants’ position, however, is that this is not a case where costs should follow the event in the usual way. The defendants submit that a consideration of the issues on which ASIC succeeded is appropriate in the circumstances, and that costs should be apportioned to account for the issues on which ASIC did not succeed. They submit that there were separate and discrete issues raised for determination at the liability trial, and, in particular, that ASIC did not succeed in relation to:

(a)    the Performance Shares case, which involved allegations of breaches of ss 181 and 182 of the Corporations Act by Mr Karantzis;

(b)    aspects of the conduct the subject of the One-off Revenue Representation case, due to the court’s acceptance that it constituted one course of conduct;

(c)    the defendants’ alleged non-disclosure of the Visa Information for period prior to 12 May 2020; and

(d)    the responses provided by the defendants to the ASX in response to the 5 May query letter.

16    The defendants submit that the Performance Shares case was temporally and factually distinct from the other aspects of ASIC’s case, and that the issues it raised were a substantial focus of Mr Karantzis’ defence and submissions, and also the conduct of the liability trial by both parties. The defendants submit further that aspects of the One-off Revenue case, as well as the allegations regarding non-disclosure of the Visa Information and the ASX Answers case, in respect of which ASIC did not succeed, were also the subject of substantial evidence and submissions.

17    While accepting that mathematical precision would be illusory, the defendants contend that the portion of ASIC’s costs that are to be paid by the company should be reduced by 15 per cent, and that those to be paid by Mr Karantzis should be reduced by 81 per cent. These reductions are said to reflect ASIC’s lack of success in relation to those issues which have been mentioned and the defendants’ successful defence of parts of ASIC’s case. The defendants submit further that the costs to be paid by each of them should be apportioned in an unequal share to reflect the fact that the Performance Shares and ASX Answers cases were advanced by ASIC only as against Mr Karantzis. They maintain that ASIC is entitled to recover approximately 40% of its costs of the liability trial.

18    With respect to penalty, the defendants submit that the court did not make the orders that were sought by ASIC. They contend that a number of submissions advanced by them were taken into account by the court in determining that a lesser period of disqualification and lesser pecuniary penalties were appropriate than those sought by ASIC. The defendants appear to suggest that ASIC is entitled to recover only 80% of its costs incurred during the penalty stage of the proceeding.

The defendants’ interlocutory application dated 31 October

19    It will be recalled that in the context of the penalty hearing the defendants filed an application seeking orders permitting them to adduce evidence of two without prejudice letters pursuant to the exception in s 131(2)(g) of the Evidence Act 1995 (Cth). The application, which was opposed by ASIC, was heard and determined by Moshinsky J. His Honour made orders substantially in the form of those sought by the defendants. The costs of the application were reserved for determination as part of the determination of the costs of the penalty stage of the proceeding.

20    The defendants submit that costs ought to follow the event with respect to this application and that ASIC should therefore pay the defendants’ costs of and incidental to it. ASIC maintains that it should be entitled to recover its costs of the application in circumstances where the evidence adduced by the defendants did not materially assist them with respect to penalty, or, in the alternative, that there should be no order as to the costs of the application. ASIC submits that the costs incurred as a result of the application were disproportionate having regard to the importance of the relevant evidence to the matters in dispute.

Assessment of costs

21    As has also been mentioned, ASIC seeks a lump sum costs order. The defendants’ position is that the court is unable to determine whether a lump sum costs order is appropriate in circumstances where ASIC has adduced no evidence to enable a determination that such an order would be logical and reasonable and sufficiently accurate to do justice between the parties, or that taxation of its costs would be unduly protracted or unduly expensive. In this regard the defendants refer to Jenkins Sh v Australia Council for the Arts [2024] FCA 309 at [46] (Horan J), Naidenov (as liquidator) v Anderson (No 2) [2024] FCA 1306 (Goodman J), Sandalwood Properties Ltd (Subject to a Deed of Company Arrangement) v Huntley Management Ltd (No 2) [2019] FCA 647 (Colvin J) (Sandalwood) and Dunstan v Human Rights Equal Opportunities Commission (No 3) [2006] FCA 916 (Mansfield J). The defendants submit that ASIC has not explained why it would be appropriate to make a lump sum costs order in this case, and that it has adduced no evidence at all in support of such an order.

DETERMINATION

The costs of the proceeding

22    For substantially the reasons advanced by ASIC, I am not satisfied that the costs of the proceeding should be apportioned in the way the defendants seek.

23    I accept that in accordance with the well-established principles outlined above, there must be exceptional circumstances to justify a departure from the starting position, which is that a successful party is entitled to its costs. I do not consider that the requisite exceptional circumstances are present in this case.

24    The defendants’ elaborate submissions proceed on the premise that the court should assess the costs which are payable to ASIC on the basis of the time spent on issues for which ASIC did and did not achieve success, or did not achieve success to the full extent. ASIC submits and I accept that for an apportionment of costs on the basis of issues on which a party was unsuccessful to be appropriate, there must be an issue or issues that are quite separate and distinct from the issues in respect of which it succeeded, or an element of unreasonableness or inappropriate conduct in relation to that issue or issues: Dr Martens at [54]; Oshlack at [69] (McHugh J). I accept also that the fact that a successful party has been unsuccessful on a particular issue or inquiry does not necessarily mean that the party has acted in the litigation inappropriately or unreasonably: BHP No 2 at [21].

25    In this regard ASIC is correct to submit that although the allegations made about Mr Karantzis’ conduct in relation to the Performance Shares case did not meet the Briginshaw standard, they were nonetheless found to be “evenly balanced”: Liability Judgment at [601], [727]. ASIC is also correct to submit that the evidence and issues raised by this aspect of its case are not clearly severable and distinct to the issues raised by the other aspects of ASIC’s case. I accept ASIC’s submission that the issues and evidence adduced in support of the Performance Shares case overlapped significantly with other parts of its case, including the One-off Revenue Representation and the non-disclosure of the One-off Revenue/Costs Information. To the extent that the defendants maintain a submission that the Performance Shares case was separate to, did not overlap with, and is distinct and severable from the remainder of ASIC’s case, I do not accept that this is so. I accept that in all the circumstances it was not unreasonable for ASIC, as the regulator, to agitate the Performance Shares case. To the extent that the defendants maintain that Dr Martens must be distinguished in the present case, I do not accept that this is so either.

26    I also do not accept the defendants’ submission that the Performance Shares case was the most factually intensive part of the liability trial such that it materially increased its length. The lay witnesses who gave evidence on behalf of the defendants in relation to the Performance Shares case also did so substantially with respect to other issues. None of the expert evidence concerned the Performance Shares case. And, obviously enough, the penalty phase did not concern issues in respect of which ASIC did not succeed. I therefore do not accept the defendants’ submission that if ASIC had not pursued this aspect of its case, Mr Karantzis would have avoided significant costs in defending the proceeding.

27    Nor is there any basis to apportion the costs of the liability trial having regard to the remaining issues on which ASIC did not succeed. With respect to the non-disclosure of the Visa Information, had ASIC only alleged contraventions from 12 May 2020 and not for the earlier period, it would still have been necessary for ASIC to draw the court’s attention to the documents and evidence which related to this earlier period. The same may be said of the ASX Answers case. That is, it was necessary for ASIC to raise allegations regarding the responses given by Mr Karantzis and the company by reference to the 5 August query letter in the context of its misleading and deceptive conduct case as a whole, and evidence in relation to this letter itself would have been adduced in any event. ASIC submits and I accept that to apportion costs with respect to these aspects of the liability trial would involve “a nit-picking exercise which would obscure and ignore the ultimate result”: Telstra Corporation Ltd v Australian Competition Tribunal (No 2) [2009] FCAFC 34 at [15] (Jacobson, Lander and Foster JJ) cited in Emirates v Australian Competition and Consumer Commission (No 2) [2009] FCA 492 at [11] (Middleton J).

28    In light of the principle articulated by the Full Court in EMI Songs, I accept ASIC’s submission that an apportionment of costs in the manner proposed by the defendants, which would result in the defendants paying approximately 40 per cent of ASIC’s costs of the liability trial, would not reflect the interests of justice in the circumstances of this case. I would not, for these reasons, order that the costs of the liability trial be apportioned.

29    With respect to the penalty stage of the proceeding, I do not accept the defendants’ submission that costs should be apportioned on the basis that the court ultimately ordered lower pecuniary penalties, and a lesser period of disqualification for Mr Karantzis, than were sought by ASIC. Such a submission is untenable in the circumstances. As ASIC submits, the majority of the evidence that was adduced by the defendants and the submissions that were relied upon by both parties on penalty concerned the question of disqualification. The defendants’ position was that no disqualification order was justified. ASIC was plainly required to address the court on all issues relevant to the question of disqualification. The complexity and length of that stage of the proceeding would not have differed in any material respect if a lesser period of disqualification was sought by ASIC. No apportionment or reduction in the costs to be paid by the defendants is warranted for the penalty stage either.

30    I am therefore satisfied that, subject to a consideration of the position with respect to the defendants’ interlocutory application dated 31 October 2025, ASIC is entitled to recover its costs of the proceeding without any apportionment on an issues basis. I do not consider that there is a proper basis for ASIC’s costs to be apportioned between the defendants, and no indemnification order was sought.

The defendants’ interlocutory application dated 31 October 2025

31    Turning then to the defendants’ interlocutory application dated 31 October 2025, I am not persuaded that there should be any order as to the costs of this application.

32    As ASIC submits, it is significant in this regard that the court determined in the Penalty Judgment that the two without prejudice letters which were adduced by the defendants following their success on their interlocutory application did not weigh materially, or have any significant mitigating effect, on the determination of penalty: Penalty Judgment at [218]-[221]. I am not satisfied that the defendants are entitled to their costs of the application for this reason, and more generally when regard is had to the court’s findings with respect to penalty. By the same token, however, I do not consider that, in all of the circumstances, it would be appropriate to order that the defendants pay ASIC’s costs of this application. As the defendants’ substantial success on the application indicates, it was open to them to bring it.

33    There will therefore be no order as to the costs of the defendants’ interlocutory application dated 31 October 2025.

Assessment of costs

34    As to whether a lump sum costs order should be made, having regard to the principles explained by Colvin J (at [8]-[23]) in Sandalwood, I am not satisfied that ASIC has demonstrated sufficiently that such an order would be appropriate in this case. There will therefore be an order that ASIC’s costs be taxed in the usual manner, absent any agreement to an amount.

Conclusion

35    For these reasons there will be orders that the defendants pay ASIC’s costs of and incidental to the proceeding, other than the costs that ASIC incurred as a result of defendants’ interlocutory application dated 31 October 2025. ASIC’s costs are to be assessed by way of taxation if they cannot be agreed.

Associate:

Dated:    22 December 2025