Federal Court of Australia

Birenbaum v H & A Nominees Pty Ltd trading as Cairo Takeaway (Costs) [2026] FCA 1233

ORDERS

THE COURT ORDERS THAT:

1.    The applicant pay the costs of the respondents of and incidental to the respondents’ interlocutory application dated 16 April 2026 upon an indemnity basis, including those for the costs application and the determination of the quantum of costs payable.

2.    The costs be determined on a lump sum basis by a registrar, and in accordance with procedural orders made by a registrar.

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

REASONS FOR JUDGMENT

BROMWICH J:

1    On 30 June 2026, I made orders and delivered my reasons in relation to an interlocutory application filed by the respondents, seeking declarations to the effect that the applicant, Mr Ofir Birenbaum, breached the Settlement Deed by which the parties agreed to resolve the substantive defamation proceeding brought by Mr Birenbaum: Birenbaum v Cairo Takeaway (breach of settlement deed) [2026] FCA 839 (Deed Judgment, or J). I found in favour of the respondents.

2    The first respondent is the company trading as Cairo Takeaway, the venue where the events giving rise to the substantive defamation proceeding took place. The remaining respondents are individuals associated with that company. The Deed was executed by and between Mr Birenbaum, the respondents, Nationwide News Pty Ltd (the publisher of the Daily Telegraph) and a reporter and videographer who had attended Cairo Takeaway with Mr Birenbaum.

3    On 21 July 2026, I made orders for the parties to file and serve evidence and submissions in relation to costs, and that the orders as to costs were to be determined on the papers unless I decided to hear from the parties. The parties were content for costs to be determined on the papers.

4    It is common ground that Mr Birenbaum should pay the respondents’ costs of the interlocutory application and that the quantum of costs should be determined on a lump sum basis. However, the respondents seek the costs be ordered to be paid on an indemnity basis, while Mr Birenbaum seeks that they be awarded on the ordinary, that is to say, party/party basis.

5    Both sides were amendable to the quantum of the costs order being determined on a lump sum basis by a registrar in accordance with this Court’s Costs Practice Note (GPN-COSTS – see Pt 4), who can also address the necessary procedural orders for that purpose. Ideally that would progress with the parties submitting agreed or competing procedural orders to the registrar for that to take place, but I leave that detail to the registrar as well.

6    It is not in doubt that the Court has a broad and largely unfettered discretion to order costs to be paid on an indemnity basis, but that it must be exercised judicially. The principles were conveniently summarised earlier this month by Lenehan J in giving reasons for making an indemnity costs order against an applicant in Plaintiff S111A/2018 v Commonwealth of Australia (Costs) [2026] FCA 1075:

[4]    In Puxty v Monarch Advisory Group Pty Ltd (Costs) [2023] FCA 650, Thawley J described the nature of the Court’s power to award indemnity costs in these terms at [9]:

The Court has a broad discretion to order costs: s 43 of the Federal Court of Australia Act 1976 (Cth) (FCA Act). The Court must interpret and apply civil practice and procedure provisions in a way that best promotes the overarching purpose set out in ss 37M(1) – see: 37M(3) of the FCA Act.

[5]    In Federal Commissioner of Taxation v Rawson Finances Pty Ltd (Costs) (2024) 301 FCR 365, Perry J described the general principles on indemnity costs in these terms at [12]:

This Court has a broad discretion to order costs under s 43 of the Federal Court of Australia Act 1976 (Cth): Wills v Chief Executive Officer of the Australian Skills Quality Authority (Costs) [2022] FCAFC 43 at [20] (Logan, Griffiths and Perry JJ). That discretion includes power to order that costs be paid on an indemnity, rather than a party/party, basis: Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 (Colgate-Palmolive) at 232-233 (Sheppard J).

The ordinary rule is that a party is entitled to costs on a party/party basis only. However, the ordinary rule may be departed from where there is “some special or unusual feature in the case to justify the Court in departing from the ordinary practice”: Colgate-Palmolive at 233 (Sheppard J). That said, as the applicant submits, references in the cases to general rules or ordinary practices for the award of costs should not be understood as fettering the discretionary nature of such decisions: GR Vaughan (Holdings) Pty Ltd v Vogt [2006] NSWCA 263 at [20] Bryson JA at [20] [sic] (with whose reasons Hodgson and Santow JJA agreed at [1] and [2]). Thus, the “categories in which the discretion may be exercised are not closed”: Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd [1991] FCA 225 at [8] (French J). “The question”, as Sheppard J explained in Colgate-Palmolive at 234, “must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis”.

(Emphasis added in bold.)

[6]    The authorities further recognise that certain (mis)conduct, including conduct properly characterised as “delinquency in the conduct of the proceedings” may, depending on the particular facts, justify an award of indemnity costs: see eg Harrison v Schipp [2001] NSWCA 13 at [136] (Giles JA, Handley JA agreeing at [1]).

[7]    In Re Beverage Freight Services Pty Ltd [2020] NSWSC 509, Black J said this at [73]:

The jurisdiction to order costs is compensatory and not punitive and whether an indemnity costs order should be made depends, at least in part, on whether there was a relevant delinquency on the part of the unsuccessful party: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 89. The relevant principles were also considered by the Court of Appeal in Cabport Pty Ltd v Marinchek (No 2) [2013] NSWCA 131 at [6] where the Court observed that an order for indemnity costs may be made where conduct in proceedings is plainly unreasonable or involves an element of delinquency.

(Emphasis added in bold.)

[8]    To similar effect, in Wu v Avin Operations Pty Ltd (No 2) [2006] FCA 792, Kenny J said this at [42]:

A court may award indemnity costs in respect of misconduct which causes loss of time to the Court and to other parties: Tetijo Holdings Ltd v Keeprite Australia Pty Ltd (Fed C of A, French J, WAG 55 of 1988, 3 May 1991 unreported) referred to with approval in Colgate-Palmolive at 233; Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189 at [7] per Harper J. As Mason P, with whom Meagher and Clarke JJA agreed, said in Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 616, “the court requires some evidence of unreasonable conduct, albeit that it need not rise as high as vexation” before departing from the usual party and party costs order. The procedural history provides sufficient evidence of unreasonable conduct on the part of Mr Armitage, through his legal representatives or personally, to continue to justify an indemnity costs order on Ms Wu’s motion.

(Emphasis added in bold.)

[9]    The identification of “delinquency” or “misconduct” as a basis for ordering indemnity costs is not in tension with the notion that costs orders are compensatory, not punitive. That was explained by Gummow and Gaudron JJ in Oshlack v Richmond River Council (1998) 193 CLR 72 at 89 [44] in this way (in the passage to which Black J referred in Re Beverage Freight Services Pty Ltd):

It may be true in a general sense that costs orders are not made to punish an unsuccessful party. However, in the particular circumstance of a case involving some relevant delinquency on the part of the unsuccessful party, an order is made not for party and party costs but for costs on a "solicitor and client" basis or on an indemnity basis. The result is more fully or adequately to compensate the successful party to the disadvantage of what otherwise would have been the position of the unsuccessful party in the absence of such delinquency on its part.

(Emphasis added in bold.)

7    One important consideration, adverted to in the decision of Thawley J in Puxty v Monarch Advisory Group Pty Ltd (Costs) [2023] FCA 650 at [9], reproduced by Lenehan J above at [5], is that s 37N(4) of the Federal Court of Australia Act 1976 (Cth) requires that the Court “must take account of any failure to comply with the duty imposed by subsection (1) or (2)”. I am therefore required to take into account Mr Birenbaum’s failure to comply with the duty to conduct litigation in accordance with the overarching purpose in s 37M.

8    Mr Birenbaum, via a costs consultant’s written submissions, asserts by reference to my judgment and some authority, but without reference to any other evidence:

[6]    A costs order should be made on the ordinary basis. Indemnity costs may be awarded where unsuccessful proceedings have been brought and prosecuted, not for the bona fide purpose of protecting and enforcing a legal right, but to achieve an ulterior or extraneous purpose: Ragata Developments Pty Limited v Westpac Banking Corporation (Federal Court of Australia, 5 March 1993, unreported).

[7]    No such feature is present in this case. The finding relates to the merits of the substantive dispute determined by the IA. It does not suggest that the IA was brought or defended for any improper purpose, or other than as a genuine attempt to protect and enforce a legal right.

[8]    The Applicant’s opposition to the IA was reasonably arguable and necessary. This is reflected in the Court’s reasons, which addressed contested issues including the construction of clause 18, the scope of Ms Giles’ retainer, and whether the relevant statements were inconsistent with the Joint Statement.

[9]    Further, there is no basis to conclude that the Applicant acted improperly in resisting the IA or in seeking to resolve the costs issue. The Applicant accepted that costs should follow the event on the ordinary basis and sought to engage constructively regarding quantum.

[10]    The Respondents’ offers were not accepted because they were advanced without supporting costs material and maintained a claim for indemnity costs without identifying any particularised conduct said to justify such an order. In those circumstances, the Applicant was entitled to seek clarification and supporting material before resolving the matter.

[11]    In Cachia v Hanes (1991) 23 NSWLR 304 at 318, Handley JA observed that, even where a party is legally represented and successful in litigation, the costs system does not provide a complete indemnity for all costs, time and inconvenience incurred in pursuing or defending proceedings. His Honour noted that represented parties are not ordinarily compensated for their own time spent preparing their case or instructing solicitors, and that such matters do not form part of recoverable costs.

[12]    Accordingly, the fact that a party has incurred time, expense or inconvenience in participating in litigation does not, of itself, justify a departure from the ordinary costs order or an award of indemnity costs. There must be some additional feature in the conduct of the proceedings that warrants such an order.

[13]    For those reasons, the Applicant should pay the Respondents' costs of the IA on the ordinary basis only.

9    I did not find Mr Birenbaum’s costs consultant’s written submissions to be of much assistance, not least because they cherry-picked small parts of my reasons for finding for the respondents and ignored important findings that I made that were relevant to costs, being matters that are properly addressed in the respondents’ submissions as relevantly reproduced below. It is simply incorrect to suggest that absent an ulterior or extraneous purpose on the part of Mr Birenbaum, indemnity costs cannot be awarded; cf [6]-[7] of the cost consultant’s written submissions reproduced immediately above.

10    The written submissions for the respondents focus on a number of important considerations relied upon by them as to the basis for awarding costs on an indemnity basis. They refer to three affidavits from the respondents’ solicitor, Mr Stewart James O’Connell, defined by reference to their dates (30 July 2026 (SJOC July) 16 April 2026 (SJOC April), 27 May 2026 (SJOC May)) and the affidavit of Mr Birenbaum sworn 4 May 2026 (Birenbaum May affidavit). The relevant analysis that follows is detailed and succinct. The respondent’s written submissions cannot readily be improved upon, such that it is more efficient to reproduce them than to summarise them further. The salient parts of those submissions are as follows:

[7]    Amongst many, the respondents rely on the following factors:

a.    The respondents made many reasonable offers to settle the breach of Deed proceedings before the application was filed and prior to the hearing (see e.g. SJOC April and SJOC July [5]-[6]). One offer only required a payment by the applicant of the $625 application filing fee as part of the monetary component of the offer. At no time did the applicant offer to pay any of the respondents, costs.

b.    The Court found the applicant’s and his lawyer’s conduct was a “reasonably flagrant departure from the overarching purpose in s 37M(1)” and “at the very least, in breach of the duty in s 37N(1) and (2)” (J[25] and [26]);

c.    The applicant and his lawyer knowingly and materially misrepresented the outcome of the settlement (J[77]), which unnecessarily caused this litigation.

d.    The applicant and his lawyer both filed and served evidence, prior to the Notice to Produce being issued, deposing to the fact that they did not communicate with anyone at SkyNews and that the applicant never instructed his lawyer to communicate with anyone at SkyNews about compensation being paid (Birenbaum May affidavit [5] and SJOC July; [4] of SOC-1). Those affidavits were also silent as to the circulation of both the Birenbaum and Giles statements (the respondents in their evidence having identified a few specified publications in the media of which they became aware). The consequence was the applicant and his lawyer engaged in conduct that materially misled the respondents. For example, it emerged and the Court found:

i.    a Briefing Note had been sent to select journalists including the Birenbaum statement and the Giles statement. This only came to light via a Notice to Produce (SJOC May [4]);

ii.    the applicant sent the Birenbaum statement to many high-profile persons via direct messages, including two people at SkyNews (J[41g]). This only came to light via a Notice to Produce (SJOC May [6]). The applicant had to orally correct his evidence at the hearing (J[85a]);

iii.    pursuant to a call, the applicant had engaged in WhatsApp messages with Ms Markson which had the resolution of the proceedings as their “central concern” (J[86]);

iv.    the applicant’s lawyer, on instructions, had in fact communicated with Ms Markson in breach of the Deed (J[90]); and

v.    despite her affidavit being relied on in the applicant’s written submissions and being called for cross-examination (SJOC July [3]-[4]) the applicant’s lawyer resiled from giving evidence at the hearing. The Court has already drawn an inference that her evidence would not have assisted her client (J[90]) and it is plain her affidavit was contradicted by the documents discussed above at i to iii. No explanation or apology has been given.

[8]    It follows that for the entire course of the negotiations seeking to settle the breach of Deed issue, the respondents laboured under a materially incorrect picture, concerning the existence of the Briefing Note, circulation of the Birenbaum and Giles statements, communications with Ms Markson (SJOC July [5]-[8]) and those being “either as a result of [the applicant’s] direct instructions or as part of [his lawyer’s] retainer” (J[84]; [92]).

[9]    That materially incorrect picture was to the knowledge (and benefit) of the applicant but to the detriment of the respondents, who were, in good faith, attempting to settle the dispute prior to the hearing of the application (see e.g SJOC April at [13]-[16] and SOC- 15 – SOC-18 and SJOC July [5]).

[10]    That alone is egregiously wrong and unreasonable behaviour sufficient to ground an order for indemnity costs. The Court will bear in mind the context being that the “settlement of proceedings, in whole or in part, is central, in the most practical way, to the proper administration of justice.” (J[94]).

[11]    Finally, but for the documents produced pursuant to the Notice to Produce, an inference is available that the applicant’s lawyer’s affidavit might have been read in the proceedings and which might have materially misled the Court as to the true nature of the communications with SkyNews.

11    The above submissions capture accurately the proper way to look at what has transpired. Most importantly, the need for the respondents to seek declaratory relief was entirely driven by inappropriate conduct by Mr Birenbaum in relation to the Deed, both by him in person and on his behalf by his solicitor, Ms Giles, being conduct that was inconsistent with the overarching purpose. That was made worse by the dismissive approach taken to the offers made by the respondents as to remedying that behaviour, and by the refusal to engage on the question of costs for reasons that I regard as largely spurious.

12    The award of indemnity costs is amply justified, in order, paraphrasing the words of the High Court in Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [44] (Gummow and Gaudron JJ), to more fully or adequately compensate the respondents for the disadvantage of what otherwise would have been the situation in the absence of delinquency on the part of Mr Birenbaum. In my view, that extends to him resisting an order for indemnity costs as well, advanced on such a flimsy basis. The objective should be to ensure that the respondents are not left out of pocket at all for all costs that have been properly incurred in relation to the entirety of the respondents’ interlocutory application, including the obtaining of this costs order, and extending to the costs of the lump sum quantification of the amount payable.

13    For these reasons, Mr Birenbaum must pay the costs of the respondents of and incidental to the respondents’ interlocutory application, on an indemnity basis.

Associate:

Dated:    27 August 2026