Federal Court of Australia

Top Energy Holdings Pty Ltd v Liu (No 2) [2026] FCA 1374

ORDERS

THE COURT ORDERS THAT:

1.    Judgment for the applicant against the first and third respondents to the originating process in the sum of $880,000, plus pre-judgment interest of $349,044.47.

2.    The first and third respondents pay the applicant 75 per cent of the applicant’s solicitor/client costs of the originating process.

3.    The cross-claim be dismissed.

4.    The cross-claimant pay the cross-respondent’s costs of the cross-claim on the indemnity basis.

5.    Orders 2 and 4 do not operate upon extant costs orders.

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

REASONS FOR JUDGMENT

GOODMAN J:

A.    Introduction

1    These reasons for judgment address questions of the relief, to give effect to Top Energy Holdings Pty Ltd v Liu [2026] FCA 689 (Top Energy (No 1), or J), and costs. Some familiarity with Top Energy (No 1) is assumed and definitions used therein have been adopted.

B.    Background

2    Top Energy commenced the proceeding by filing an originating process, together with a concise statement. The respondents are Amie, Wilson and WSE. The concise statement set out a case based upon an alleged breach of directors duties by Amie and Wilson to which WSE was allegedly an accessory (breach of duty claim). The breach of duty claim was based upon the BSA being a bona fide agreement.

3    Subsequently, Top Energy filed an amended concise statement, which introduced a further cause of action (principal claim). The essential allegation in the principal claim was that the BSA was not a bona fide agreement created on or about the date it bears but instead was brought into existence at a time after the relationship between Amie and Richard had broken down.

4    I will refer to the breach of duty claim and the principal claim together as the main claim.

5    WSE filed a cross-claim in which it claimed that Top Energy was liable to it pursuant to the WSE Loan Agreement.

6    In Top Energy (No 1) I held, inter alia, that:

(1)    as to the principal claim:

(a)    although that claim was described in the amended concise statement as a claim that the BSA was a “sham”, that claim was particularised as one based upon fraud; and each of the respondents had met the claim on the basis that they had been accused of fraudulent conduct. Further, that claim was fought on the basis that if the fraud was established then Amie (via her corporate interests) improperly obtained a benefit of $880,000 (J[16]);

(b)    the BSA was not a bona fide agreement and was brought into existence after the breakdown of the relationship between Amie and Richard (J[225] to [246]). The BSA was signed by Sam and Wilson, and Amie witnessed their signatures (J [103], [247]);

(c)    thus, Top Energy succeeded on the principal claim and the $880,000 transferred from Top Energy to WSE in reliance upon the BSA should be returned to Top Energy (J[247]);

(2)    the breach of duty claim fell away because it was premised upon the BSA being a bona fide document and findings were made to the contrary (J[18], [248]); and

(3)    the cross-claim should be dismissed because the WSE Loan Agreement was not a bona fide agreement (J[250] to [264]).

7    I concluded that: (1) on the main claim, the principal claim succeeded and the breach of duty claim fell away; and (2) the cross-claim failed (J[301]).

C.    Form of relief

8    I turn now to the form of relief that should be ordered.

9    The parties are at issue with respect to several aspects of that relief.

10    The first is which parties are liable to compensate Top Energy on the main claim. It is common ground that WSE is liable and that Wilson is not. At issue is whether Amie is liable.

11    Counsel for Amie submitted that she should not be liable to compensate Top Energy because: (1) the pleaded case was that the fraudulent conduct was undertaken for the benefit of Amie and there is no evidence or finding that she personally received any part of the $880,000; and (2) the relief sought was for the “return” of the $880,000 and the only respondent capable of doing so was the recipient of the $880,000, namely WSE.

12    In my view, this is an overly narrow approach. As identified at J[16], each of the respondents, including Amie, met the principal claim on the basis that they had been accused of fraudulent conduct. I also do not accept the submission that the only respondent capable of providing for the return of the $880,000 is WSE. Compensation in the form of payment from Amie is also capable of amounting to the return of the $880,000 to Top Energy. In this regard the conduct of Amie, which has been found to be fraudulent, caused the loss to Top Energy. It is not necessary that she personally received the benefit in order for her to be required to compensate Top Energy for the consequences of her conduct.

13    Thus, WSE and Amie are both liable to compensate Top Energy for the $880,000, together with interest.

14    The second issue is the form of the order requiring payment of the $880,000 plus interest. Top Energy seeks an order that there be judgment against WSE and Amie for that amount as calculated; whereas the respondents seek an order that the amount as calculated be paid by a particular date. The differences are, in my view, matters of form rather than substance. I will make an order for judgment in favour of Top Energy.

D.    Costs

15    I turn now to the question of costs.

16    It is well-established that the Court’s discretion with respect to costs, found in s 43 of the Federal Court of Australia Act 1976 (Cth), is broad albeit it must be exercised judicially.

17    The usual rule is that costs follow the event. Thus, it is convenient to commence by identifying the relevant event or events.

18    In this regard, Top Energy was: (1) successful on the main claim, as against WSE and Amie; and (2) also successful in resisting the cross-claim.

19    It is common ground that WSE is liable with respect to the costs of the cross-claim.

20    However, the parties are at odds as to:

(1)    within the main claim:

(a)    which of the respondents ought be liable for the costs referable to the principal claim;

(b)    whether the costs referable to the principal claim ought be payable on a party and party basis or on the indemnity basis;

(c)    which party or parties ought be liable for the costs referable to the breach of duty claim;

(d)    whether the costs of the breach of duty claim ought be payable on a party and party basis or on the indemnity basis; and

(2)    on the cross-claim, whether WSE ought pay costs on a party and party basis or on the indemnity basis.

D.1     Which of the respondents ought be liable for the costs of the main claim referable to the principal claim?

21    The parties are at issue as to whether Wilson should be liable for the costs of the main claim referable to the principal claim.

22    As noted above, Top Energy did not press for an order that Wilson be liable for the $880,000 plus interest, seeking such an order only as against WSE and Amie. In these circumstances, there is no relevant event and it is difficult to justify the making of a costs order with respect to the costs of the main claim referable to the principal claim as against Wilson. Top Energy sought to justify the making of such an order on the basis that Wilson participated in the fraudulent conduct, however I do not regard this as a sufficient basis in circumstances where Top Energy did not press for an order for payment against Wilson.

23    It follows that WSE and Amie, but not Wilson, are liable for the costs of the principal claim.

D.2    Should the costs of the main claim referable to the principal claim be payable on a party and party basis or on the indemnity basis?

24    Top Energy submits that the costs of the main claim referable to the principal claim should be paid on the indemnity basis because the conduct which founded the principal claim was fraudulent conduct engaged in by Amie and WSE. In this regard, Top Energy relies upon the observations of Justice O’Callaghan in Neville’s Bus Service Pty Ltd v Pitcher Partners Consulting Pty Ltd (No 2) [2019] FCA 198; (2019) 369 ALR 185 at 188 [15] and Justice Cheeseman in Westpac Banking Corporation v Forum Finance Pty Limited (in liq) (Relief) [2025] FCA 882 at [50] for the proposition that where a costs applicant has been the victim of fraud perpetrated by a costs respondent, the award of indemnity costs is “close to irresistible”. See also Cassar v Cassar (Costs of preliminary questions) [2024] VSC 537 at [2] to [3] (Gorton J) and Grant v Grant; Grant v Grant (No 3) [2021] NSWSC 1 at [8] (Slattery J).

25    As previously noted, the principal claim was fought on the basis that the BSA was a fraudulent document and findings were made to that effect. Counsel for the respondents fairly acknowledged that his clients were bound by those findings but sought to distinguish Neville’s Bus Service and Forum Finance on the basis that there were significant differences of fact in each of those proceedings.

26    It may readily be accepted that each exercise of the cost discretion depends upon its particular facts. Nevertheless, I am satisfied in the present case that Amie and WSE falsely denied the fraud thereby significantly lengthening the proceeding and increasing the costs incurred by Top Energy. It follows that Amie and WSE should pay Top Energy’s costs of the main claim referable to the principal claim on the indemnity basis.

27    As Gaudron and Gummow JJ explained in Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 89 [44], such an order is not made to punish the delinquent party, rather to more fully or adequately compensate the successful party.

D.3    Which party or parties ought be liable for the costs of the main claim referable to the breach of duty claim?

28    I turn now to the costs of the main claim referable to the breach of duty claim.

29    Top Energy submits that the respondents are liable for the costs of the breach of duty claim because this claim was part of the main claim which became unnecessary to determine; and as Top Energy was successful in the main claim as a whole, costs should follow the event.

30    The respondents accept that Top Energy was successful on the main claim but contend that such success was limited to the principal claim and an allowance should be made for the costs of the breach of duty claim in circumstances where, they contend: (1) the breach of duty claim ought never to have been brought because it had no prospects of success and was bound to fail; (2) costs were incurred solely in relation to that claim in the period of approximately one year between the commencement of the proceeding and the pleading of the principal claim; and (3) the inclusion of the breach of duty claim unnecessarily prolonged the hearing.

31    I do not accept the respondents’ submissions for the following reasons.

32    First, although there is an exception to the proposition that the Court will not ordinarily determine the costs of an issue that has not been determined on its merits where it is clear that a party would have succeeded or failed on that issue, I am not satisfied on the evidence that it is sufficiently clear Top Energy was bound to fail on the breach of duty claim.

33    Secondly, I do not consider that Top Energy should be deprived of its costs referable to the breach of duty claim in circumstances where: (1) that claim was commenced upon the premise that the BSA was a bona fide document when, it may be inferred, Top Energy was unaware at the time of commencement of the proceeding of evidence suggesting that the BSA was a fraudulent document; (2) it was not unreasonable for Top Energy, upon discovering existence of such evidence, to advance both the breach of duty claim and the principal claim as alternative claims; and (3) it ultimately became unnecessary to determine the breach of duty claim. I accept, as counsel for the respondents submitted, that the two claims were true alternatives in the sense that at best only one of the two alternatives could succeed because the success of one alternative meant that the other must fail. However, it ill behoves parties who unsuccessfully resisted, over a considerable period of time, claims based upon their behaviour that was held to be fraudulent to contend that the victim of the fraud ought to have limited its case to the principal claim.

34    It follows that the costs of the main claim referable to the breach of duty claim should follow the event.

D.4    Should the costs of the main claim referable to the breach of duty claim be payable on a party and party basis or on the indemnity basis?

35    However, I am not satisfied that there was any conduct of Amie and WSE which justifies an award of costs on an indemnity basis with respect to the costs of the main claim referable to the breach of duty claim, particularly with respect to the period before the principal claim was added to the proceeding.

D.5    Should WSE pay the costs of the cross-claim on a party and party basis or on the indemnity basis?

36    WSE advanced the cross-claim upon the basis that the WSE Loan Agreement was a bona fide document. It was held to be a fraudulent document. By the application of the principles discussed at D.2 above, WSE should pay the costs of the cross-claim on the indemnity basis.

E.    Conclusion

37    For the reasons set out above:

(1)    there should be judgment for Top Energy against Amie and WSE for $880,000 plus pre-judgment interest of $349,044.47;

(2)    Amie and WSE should pay Top Energy’s costs of the main claim with the costs referable to the principal claim payable on the indemnity basis and the costs referable to the breach of duty claim payable on a party and party basis. In order to avoid the practical difficulties which would arise on a taxation of costs on such a basis, taking into account my impression that each claim occupied approximately the same amount of time, and taking a necessarily broad-brush and impressionistic approach, I will order that Amie and WSE pay 75 per cent of Top Energy’s solicitor and client costs incurred on the main claim;

(3)    the cross-claim should be dismissed; and

(4)    WSE should pay Top Energy’s costs of the cross-claim on the indemnity basis.

38    I will make orders accordingly.

Associate:

Dated:    17 September 2026