Federal Court of Australia

DC Rd DC Pty Ltd v Zhang (Costs) [2026] FCA 938

ORDERS

THE COURT ORDERS THAT:

1.    Each of the first, second, fourth to seventh, ninth, tenth, and fifteenth respondents pay the first applicant’s costs in the lump sum amount of $3,480,079.98.

2.    Each of the eleventh, twelfth, thirteenth and sixteenth respondents pay the first applicant’s costs in the lump sum amount of $745,731.42.

3.    The fourteenth respondent pay the first applicant’s costs in the lump sum amount of $745,731.42.

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

REASONS FOR JUDGMENT

JACKMAN J:

1    I gave judgment in these proceedings on 23 January 2026: DC Rd DC Pty Ltd v Zhang (Trial Judgment) [2026] FCA 16 (Trial Judgment). I set a timetable for the exchange of written submissions and affidavits on the question of costs, which has been extended several times by the agreement of the parties. Defined terms used in the Trial Judgment bear the same meanings in these reasons.

2    The applicants’ primary position is to seek orders that the first, second, fourth to seventh and ninth to sixteenth respondents pay the applicants’ costs by way of lump sum in the amount of $4,921,621.13, plus their costs of the costs application in the amount of $49,921.70. Those orders are opposed by the Bob Parties, the Lian Parties and John. The other parties have not made any submissions on costs.

3    The first issue is whether there should be a discount by reason of the applicants not having succeeded on all issues. Although only one of the four applicants succeeded, I do not regard that as having a material bearing on this issue, as the inclusion of the other three applicants did not significantly (if at all) increase the costs of the applicants or the respondents.

4    The Bob Parties and Lian Parties draw attention to a number of issues on which the applicants failed, citing the reasoning in the Trial Judgment at [260]–[268], [274], [278], [281], [343], [347], [357], [363], [364] and [420]. However, I do not regard those matters as sufficiently significant or severable to warrant a discount in the context of the very large measure of success achieved by DC Rd across a broad range of issues and causes of action.

5    John relies on the fact that the apportionment of the loss caused by his misleading conduct was 15%, and on the fact that the tracing claim for $500,000 was unsuccessful. I have taken those matters into account in relation to the apportionment issue, and I do not regard it as appropriate to make any additional discount.

6    The next issue is whether there should be several liability (rather than joint and several liability) as between the respondent groups, and if so what apportionment should be made.

7    The Bob Parties, Lian Parties and John submit, and I accept, that joint and several liability for costs is the starting point, but the Court has a discretion which it must exercise judicially to achieve a fair and reasonable outcome for all parties. The Bob Parties and the Lian Parties submit that an apportionment which would do substantial justice between the parties would be (a) the Tony Parties 37.5%, (b) the Bob Parties 37.5%, (c) the Lian Parties 10%, and (d) John 15%. The applicants submit that the appropriate apportionment would be (a) the Tony Parties and Bob Parties 70%, (b) the Lian Parties 15%, and (c) John 15%.

8    The Lian Parties submit that they were found liable as volunteer recipients of specific amounts traced from the DC Rd Proceeds, but only from the time of Lian’s actual knowledge on 14 February 2023, and no finding of fraud or dishonesty was made against Lian. The aggregate liability of the Lian Parties was approximately $5.67 million. The Lian Parties also rely on the fact that a number of claims against them failed, citing the Trial Judgment at [343], [347], [357] and [363]. Although the Lian Parties correctly submit that they were not involved in any of the underlying wrongdoing, I note that it was necessary for the applicants to establish that wrongdoing on the part of others as the foundation for the personal and proprietary remedies which they sought through the tracing process.

9    John relies on the fact that he was joined as a party late in the proceedings, in that the proceedings were commenced on 17 March 2023 and John was not joined until 13 December 2024. John submits that he should not be liable for costs incurred before he was joined. I reject that submission. The claims against John required proof of matters relating to the initial discussions with Phillip concerning the Denham Court Property and the tracing of the DC Rd Proceeds, which were the subject of a great deal of work by the applicants before the joinder of John. Whether that work was performed before or after 13 December 2024 is not material.

10    John also relies on the extent to which the applicants’ claims were unsuccessful (whether against him or against the other respondents), particularly the claims of fiduciary obligation, which John submits were of tangential relevance to the claims against him, and the tracing claim against him yielded only a judgment for $150,000 against him, rather than the $650,000 sought (which in itself was about 2% of the DC Rd Proceeds). The $500,000 tracing claim was the subject of a separate supplementary expert report and affidavit by Phillip. John submits that of the 68 subpoenas issued by the applicants, only 7 were relevant to the tracing claim for $150,000, the links in the chain for tracing the $150,000 involved 3 bank accounts which were all in Australia, and the tracing workpapers for the $150,000 in its tracing expert’s report comprised only 10 out of approximately 580 pages. In relation to the misleading conduct claim, John relies on the apportionment of his liability of 15% of the loss suffered as a relevant, but not necessarily determinative, factor. John contends for an apportionment of 15% of the applicants’ costs, after excluding costs incurred before his joinder on 13 December 2024 (and the application of other discounts and deductions).

11    In my view, this is an appropriate case for an apportionment of the liability for costs as between the different groups of respondents. In particular, it would not be fair or reasonable to make the Lian Parties or John liable for all the applicants’ costs, in circumstances where their own involvement was much more limited than that of the Tony Parties and the Bob Parties, and no allegations of fraud or dishonesty were made against them. In all the circumstances, I regard the following as a fair and reasonable apportionment:

(a)    15% for each of the Lian Parties, those parties being liable for substantial amounts by way of personal and proprietary remedies flowing from the tracing of the DC Rd Proceeds, which depended on proof of the primary wrongdoing;

(b)    15% for John, being the same as his proportionate share of the misleading conduct claim, the evidence for which also overlapped to some extent with proof of the underlying wrongdoing which was the foundation for the personal and proprietary remedies flowing from the tracing exercise, even though those claims against John were largely separate from other aspects of the tracing exercise; and

(c)    the balance of 70% for each of the Tony Parties and Bob Parties, reflecting the fact that they jointly orchestrated the fraud at the centre of the case in a closely integrated manner, and are liable for the loss claimed by DC Rd as well as most of the proprietary relief claimed.

12    The next issue concerns whether a lump sum order should be made. The Court’s preference is for the making of a lump sum costs order wherever it is practicable and appropriate to do so: Federal Court Practice Note GPN–COSTS at [4.1].

13    In my view, a lump sum order is appropriate in complex and lengthy litigation of this nature, so as to avoid the substantial cost, delay and inconvenience of taxing a bill of costs. Moreover, in light of the amounts of the remedies awarded against the respondents, it is realistic to contemplate that the applicants may not recover their costs of such a taxation in full.

14    The evidence provided by the applicants enables me to make a fair estimate of the amount of costs which would likely be the outcome of a taxation. The evidence is contained in two affidavits of Mr Korbel, a highly experienced litigation solicitor whose firm, Corrs, acted for the applicants. Mr Korbel’s evidence was criticised by the Bob Parties, Lian Parties and John on the basis that he was not involved in the proceedings at all at the time the costs were incurred. However, Mr Korbel prepared his evidence by reference to Corrs’ internal accounts and records, and with the assistance of a senior associate who worked on the proceedings since before they were commenced. I regard him as being in a better position to give that evidence than an independent costs consultant would have been, given his familiarity with the lawyers who were engaged on the matter and with his firm’s processes and procedures. Mr Korbel took over carriage of the matter when Ms Salvo, who had been the partner with primary carriage of the matter, left the firm shortly after the final hearing.

15    The Bob Parties and Lian Parties submit, among other criticisms, that Mr Korbel has not applied the scale rates properly on the basis that the rates in fact charged have been replaced by the maximum scale rate by reference to the person who did the work without regard to the nature of the particular work and the level of skill required. John also makes a number of criticisms of the quantification of counsel’s fees and other professional fees. However, the applicants have applied a discount to the lump sum sought of about 25% in total (including disbursements) which is in line with typically appropriate discount ranges. In my view, that discount broadly reflects the likely outcome of a taxation process. Further, the matter was difficult and complex, particularly in relation to the documentary proof of the tracing exercise, and demanded a high level of skill and experience. The other specific criticisms have been sufficiently answered by the applicants in reply.

16    The final issue is what amount should be ordered by way of lump sum. As indicated above, the applicants seek an order in the amount of $4,921,621.13, plus $49,921.70 relating to the question of costs. The amount of $4,921,621.13 excludes costs incurred on interlocutory disputes which are the subject of earlier costs orders against specific parties. I have referred in the preceding paragraph to the misplaced criticisms of Mr Korbel’s quantification of costs which would be recoverable on a taxation.

17    A particular issue concerns disbursements incurred by the applicants in retaining a consultant tracing expert at McGrath Nicol, who was not called as a witness, to assist with investigations involved in the tracing exercise. The applicants have discounted that cost by 50%, given the likelihood of overlap with the work carried out by Mr Howard of KordaMentha. The applicants submit, and I accept, that disbursements for consulting experts may be allowed in the amount actually incurred as a matter of discretion. For example, in Seven Network Ltd v News Ltd [2007] FCA 2059 at [83], Sackville J allowed the recovery of the costs incurred in engaging an expert to assist senior counsel in the cross-examination of market experts. As Sackville J said, it would only encourage parties to prolong proceedings if the costs of engaging an expert could be recovered only if the expert gives evidence in court. In the present case, the cost of engaging McGrath Nicol was incurred in identifying the whereabouts of the misappropriated funds, which was of direct relevance to the proceedings.

18    Accordingly, I accept that the lump sum sought by the applicants of $4,921,621.13 plus the costs of the costs dispute itself of $49,921.70 (being a total of $4,971,542.83) is appropriate. That amount is to be apportioned consistently with the percentages referred to in [11] above as follows:

(a)    each of the Tony Parties and the Bob Parties is liable for $3,480,079.98;

(b)    each of the Lian Parties is liable for $745,731.42; and

(c)    John is liable for $745,731.42.

Associate:

Dated:    16 July 2026

SCHEDULE OF PARTIES