Federal Court of Australia

LFDB v SM (Costs) [2026] FCA 1473

ORDERS

THE COURT ORDERS THAT:

1.    LFDB pay SM’s costs of the interlocutory application dated 19 March 2026 on the indemnity basis in the lump sum of $25,842.60 immediately.

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

REASONS FOR JUDGMENT

JACKMAN J:

1    On 10 August 2026, I dismissed LFDB’s interlocutory application dated 19 March 2026, subject to the determination of whether a vexatious proceedings order should be made against LFDB: LFDB v SM (No 9) [2026] FCA 1118 (Principal Judgment). Capitalised defined terms used in the Principal Judgment have the same meaning in these reasons. I held that the orders sought in the interlocutory application of 19 March 2026 were precluded by cause of action estoppel and issue estoppel, in contending that the registration of the NZ Relevant Judgment is null and void or of no legal effect, or that the registration (if valid) should be set aside: at [50]. I also held that, even if I had not formed that view, I would have found that LFDB’s contentions were all precluded by Anshun estoppel: at [51]. I set a timetable for affidavits and written submissions on the question of costs.

2    I have also found that the interlocutory application dated 19 March 2026 constitutes a vexatious proceeding, on the basis that it was made without reasonable ground: LFDB v SM (Vexatious Proceedings Order) [2026] FCA 1420 at [17]. That characterisation was reinforced by my rejection of LFDB’s repeated submission that the documents lodged with the Federal Court on 16 December 2015 in order to register the NZ Relevant Judgment were not available to LFDB until after the orders of Younan J were made on 31 October 2025, whereas in fact those documents were not only available to LFDB but were actually tendered by his counsel at the hearing before Griffiths J on 12 October 2016: see [12], [17] and [51] of the Principal Judgment.

3    SM now seeks that her costs of the interlocutory application of 19 March 2026 be paid by way of lump sum on the indemnity basis, payable forthwith, and quantifies the lump sum amount as between $24,450.10 and $27,235.10 (the mid-point being $25,842.60). LFDB submits that he should pay SM’s costs on the ordinary party-party basis by lump sum in an amount not exceeding $15,000, and only at the conclusion of the proceedings.

4    The first issue is whether the indemnity basis is appropriate. It is well-established that, among the circumstances which may justify an order for indemnity costs, such an order may be appropriate where the applicant, properly advised, should have known that he had no chance of success, or persists in what should on proper consideration be seen to be a hopeless case: Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd (No 2) [2017] FCAFC 116 at [5] (Jagot, Yates and Murphy JJ). In my view, the present case clearly falls within that principle for the reasons given in the Principal Judgment. That conclusion is reinforced by the fact that SM incurred additional costs in instructing new solicitors because SM’s previous solicitors had to cease acting when LFDB applied to have them joined to the proceedings. I dismissed that application for joinder (see LFDB v SM (No 7) [2026] FCA 718) and held that it was a vexatious proceeding on the basis that it was brought without reasonable ground (see LFDB v SM (Vexatious Proceedings Order) [2026] FCA 1420 at [16]). Accordingly, in my view, LFDB should pay SM’s costs of the interlocutory application of 19 March 2026 on the indemnity basis.

5    The second issue concerns the quantification of the lump sum order. SM relies on an affidavit by her solicitor, Mr Hagon, who has almost 20 years’ experience in commercial disputes and insolvency. He quantifies the actual fees and disbursements incurred by SM at $28,627.60, and allows a discount of 5 to 15% percent on solicitors’ fees assessed on the indemnity basis. Bearing in mind the relatively straightforward task of assessment relating to a single interlocutory application, I regard Mr Hagon’s affidavit as containing sufficient material to establish a logical, fair and reasonable foundation for the amount sought and to enable a broad-brush estimate to be made of the amount that an assessment of costs would be likely to yield. I have adopted the mid-point of Mr Hagon’s range.

6    LFDB submits that a substantial part of SM’s participation in the hearing on 10 August 2026 was directed to the suppression orders that had been made. However, that aspect is properly viewed as incidental to the interlocutory application of 19 March 2026, together with framing the reasons for judgment on that interlocutory application, and accordingly should not have the effect of reducing the amount to be awarded by way of lump sum.

7    The third issue is whether the costs order should be payable forthwith. Rule 40.13 of the Federal Court Rules 2011 (Cth) 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. However, the note to r 40.13 states that the Court may order that costs of an interlocutory application be taxed immediately. I regard the proceeding as now being finished, in that the interlocutory application of 19 March 2026 has been dismissed and I have determined the question of whether a vexatious proceedings order should be made. The issue therefore seems to be academic. However, against the possibility that LFDB is contemplating some further step in the proceeding, I regard it as appropriate in the interests of both fairness and certainty to order that the costs of the interlocutory application be payable immediately.

Associate:

Dated:    7 October 2026

SCHEDULE OF PARTIES