Federal Court of Australia

Larkspur Tribeca Ltd v iSignthis Ltd (Costs) [2026] FCA 1668

ORDERS

THE COURT ORDERS THAT:

1.    The first respondent, iSignthis Ltd (BVI, No. 667231), pay equitable compensation to:

(a)    the first applicant, Larkspur Tribeca Ltd (Republic of Seychelles, No. 113890), in the sum of $572,333.60; and

(b)    the second applicant, David Edmonds, in the sum of $117,328.40.

2.    The applicants’ claims against the respondents are otherwise dismissed.

3.    The first respondent pay 45% of the applicants’ party and party costs of the proceeding, excluding the period 15 July 2026 to 14 August 2026 inclusive and subject to order 6, to be taxed in default of agreement.

4.    Subject to order 5, the applicants pay the respondents’ party and party costs of:

(a)    the applicants’ interlocutory application filed on 26 June 2025;

(b)    the applicants’ interlocutory application filed on 5 August 2026; and

(c)    the case management hearings on 23 July 2026 and 29 July 2026,

to be taxed in default of agreement.

5.    The costs payable under order 4 be set-off against the costs payable under order 3.

6.    There be no order as to the costs of determining the costs dispute that is the subject of these orders.

7.    The funds paid into Court as security for the respondents’ costs, pursuant to the orders dated 4 September 2019, 2 August 2021 and 23 June 2025, be released to the applicants.

8.    Liberty to apply in respect of the release of funds paid into Court as security for the respondents’ costs.

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

REASONS FOR JUDGMENT

NESKOVCIN J

1    On 14 July 2026, I published reasons for judgment in this proceeding in Larkspur Tribeca Ltd v iSignthis Ltd [2026] FCA 908 (Reasons). This judgment concerns the orders as to costs to flow from those Reasons. This judgment should be read together with the Reasons, and I adopt the defined terms in the Reasons throughout this judgment.

2    In the Reasons, I found that the applicants succeeded in establishing that the first respondent, iSignthis BVI, breached the trust constituted by the Trust Deed by failing to hold Performance Shares on trust for the applicants and failing to transfer the rights to the Performance Shares to the applicants: Reasons at [6] and [131] (breach of trust claim). As a result, the applicants were entitled to an award of equitable compensation in the amount of $689,662: Reasons at [219].

3    The applicants otherwise failed, or there was no finding, with respect to the following additional causes of action in the proceeding:

(a)    a breach of contract claim against iSignthis BVI – which the Court found unnecessary to determine (Reasons at [136]);

(b)    a rectification claim in relation to the Trust Deed against iSignthis BVI – which failed (Reasons at [169]);

(c)    knowing receipt and knowing assistance claims against the second and third respondents, Mr Karantzis and Select – which failed (Reasons at [156]);

(d)    a misleading and deceptive conduct claim against Mr Karantzis – which failed (Reasons at [188]).

4    Further, the applicants’ expert evidence with respect to quantum was not accepted, and the Court assessed the equitable compensation awarded to the applicants with reference to the respondents’ expert evidence instead: Reasons at [216] and [217] – [219].

5    The parties requested a determination of the question of costs on the papers. The applicants relied on written submissions and reply submissions dated 18 September 2026 and 7 October 2026 respectively. The respondents relied on written submissions dated 25 September 2026. As there was no real issue of fact relevant to the determination of the question and the legal arguments could be dealt with adequately by written submissions, the question of costs was determined without an oral hearing: s 20A of the Federal Court of Australia Act 1976 (Cth) (FCA Act).

OVERVIEW of the parties’ positions

6    By the time the applicants filed their written submissions in reply, there was substantial agreement between the parties as to the form of the orders the Court should make in relation to the costs of the proceeding. Although the applicants said that they did not resile from their primary submissions (that they should have their costs of the proceeding without reduction, or alternatively with limited reductions), the applicants agreed with the respondents’ alternative form of order that the Court should apportion costs in the proceeding to reflect the parties’ respective success. The parties disagreed as to the percentage of the costs which the applicants should recover.

7    The alternative form of order sought by the applicants, apportioning costs to reflect the parties’ respective success, was as follows (highlighting the percentage differences between the parties):

(a)    iSignthis BVI pay 80% of the applicants’ party and party costs of and incidental to the proceeding, excluding the applicants’ costs during the period 15 July 2026 to 14 August 2026 inclusive (the respondents submitted the percentage should be 25%); and

(b)    the applicants pay the respondents’ party and party costs of and incidental to the applicants’ interlocutory application dated 26 June 2025, the applicants’ interlocutory application dated 5 August 2026 and the case management hearings on 23 July 2026 and 29 July 2026.

8    The respondents’ primary submission was that the applicants should have 40% of their costs of and incidental to the proceeding (based on an estimate that 70% of the proceeding concerned claims against iSignthis BVI with a further reduction to reflect the claims that failed) and the applicants should pay 30% of the respondents’ costs on an indemnity basis, on account of the claims against Select and Mr Karantzis which failed. The respondents’ alternative form of order was that iSignthis BVI pay 25% of the applicants’ costs with no order in favour of Select and Mr Karantzis.

9    The applicants sought an order releasing the moneys paid into Court by way of security for the respondents’ costs. The respondents, however, submitted that there should not be any order discharging the security held in Court until such time as the costs orders made against the applicants have been satisfied.

Applicable PRINCIPLES

10    The applicable principles in relation to costs are well-established and relevantly may be summarised as follows:

(a)    The Court has a broad discretion to award costs under s 43 of the FCA Act, which must be exercised judicially: Re Wilcox; Ex parte Venture Industries Pty Ltd (1996) 72 FCR 151 at 152 (Black CJ).

(b)    While not a rigid rule, the discretion to award costs is usually exercised in favour of a successful party: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [35] (Gaudron and Gummow JJ), [66] – [67] (McHugh J), [134] (Kirby J).

(c)    A successful party may be deprived of some of its costs, or even required to pay costs to the other party, if the party succeeded only on a portion of its claim, or failed on issues that were not reasonably pursued, or where the litigation might be described as mixed: Impiombato v BHP Group Ltd [2025] FCAFC 28 at [13] (Beach and O’Bryan JJ), citing Ruddock v Vadarlis (No 2) (2001) 115 FCR 229; [2001] FCA 1329 at [11]; Queensland North Australia Pty Ltd v Takeovers Panel (No 2) (2015) 236 FCR 370; [2015] FCAFC 128 at [11] (Dowsett, Middleton and Gilmour JJ).

(d)    It has been said that there are good reasons not to encourage applications for costs on an issue-by-issue basis, which can make the process of assessment of costs overly complicated: Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) (2015) 327 ALR 192; [2015] HCA 53 at [6] (French CJ, Kiefel, Nettle and Gordon JJ). The Court may instead order that one party pay a proportion of the other party’s costs, taking a broad brush approach based on matters of impression and evaluation of the significance of issues, the way they were determined and the amount of time and costs incurred on them, to reflect fairly the parties’ comparative success or failure in the outcome which was obtained: Sunna v Commissioner of Taxation [2026] FCAFC 133 at [98] (Hespe, Stellios and Wheatley JJ); Speets Investment Pty Ltd v Bencol Pty Ltd (No 2) [2021] QCA 39 at [17] (Bond J, Sofronoff P and Callaghan J agreeing).

(e)    When considering the appropriateness of apportioning costs, the Court should give consideration to whether the issues on which the successful party failed are clearly dominant or separable, and to whether the issues involved different factual enquiries in the one proceeding or multiple causes of action, even if based on a common substratum of fact: Les Laboratoires Servier v Apotex Pty Ltd (2016) 247 FCR 61; [2016] FCAFC 27 at [301] (Bennett, Besanko and Beach JJ).

(f)    The aim of the Court in exercising the costs discretion is to do substantial justice as between the parties in relation to costs, based on the outcomes of the various issues in the proceeding: Howards Storage World Pty Ltd v Haviv Holdings Pty Ltd (2010) 182 FCR 84; [2010] FCAFC 5 at [17] (Gray J, with whom Lindgren J agreed).

CONSIDERATION

11    I accept, as the applicants submitted, that the proceeding was, in substance, conducted by two camps. The respondents were represented by the same legal team and filed a single defence. Mr Karantzis gave instructions on behalf of the respondents and was a director of iSignthis BVI and a director and sole shareholder of Select at the relevant time: Reasons at [14]. The respondents did not suggest that the costs incurred by Mr Karantzis and Select in successfully defending the claims against them were separable or identifiable from the overall costs incurred by the respondents. As a result, and given the relationship between Mr Karantzis and the corporate respondents, it is appropriate to treat the respondents as one for the purpose of determining the overall allocation of costs, though they should be treated separately in relation to actual liability to pay costs: Entirity Business Services v Garsoft (No 2) [2011] FCA 334 at [2] (Moore J).

12    That being said, the applicants’ success against iSignthis BVI on the breach of trust claim is not to be considered a success against the respondents generally. The applicants pursued different causes of action against different respondents and were wholly unsuccessful against Mr Karantzis and Select. There is no basis for any costs order against them.

13    An issue-by-issue apportionment of costs would make the process of assessment of costs overly complicated. Both parties invited the Court to take a broad-brush approach and I agree with this course. In doing so, I have considered, at a broad, impressionistic level, the significance of the issues, the factual enquiries involved in determining them and the amount of time spent on them, to arrive at a result that fairly reflects the parties’ comparative success or failure in the outcome of the proceeding.

Claims against iSignthis BVI

14    The applicants were successful on the breach of trust claim against iSignthis BVI and were entitled to an award of equitable compensation as a result. The breach of trust claim was the key issue in the proceeding. The respondents contested nearly every issue relevant to the breach of trust claim and the claim was a central focus of the evidence and submissions at the trial. The respondents’ submissions were often unhelpful or not accepted. Although, as the respondents submitted, much of the evidence and submissions in the proceeding were not relevant to the breach of trust claim, as I stated in my Reasons at [100], both parties took the Court to a voluminous amount of correspondence, much of which was not relevant or admissible on the question of the construction of the Trust Deed.

15    At [136] of the Reasons, I found that it was unnecessary to determine the breach of contract claim given the applicants’ success in the breach of trust claim. The respondents accepted that this claim was in a different category to the applicants’ other claims which failed. While the respondents submitted that the Court should not factor this claim into the costs assessment, they, rightly, accepted that it did not significantly lengthen the trial or require additional evidence. I consider that the breach of contract claim forms part of the applicants’ successful case, and I will not make any reduction in costs in respect of it.

16    The rectification claim was brought as an alternative to the breach of trust claim. As stated in the Reasons, the applicants failed to adduce evidence in support of the alleged common intention, overlooked evidence to the contrary, and there was a fundamental disconnect between what the applicants said was the common intention and what they said would rectify the Trust Deed: Reasons at [165] – [167]. The respondents submitted that the rectification claim required the parties to adduce a “significant” volume of written and oral evidence. They did not, however, identify the “significant” volume of written evidence or identify how it differed from the voluminous amount of correspondence the parties took the Court to on the question of the construction of the Trust Deed. I accept, however, that the parties were required to adduce some further evidence because the rectification claim required proof of the parties’ common intention and it necessitated separate submissions. As a result, I would make a minor reduction in the costs awarded to the applicants in respect of this issue.

Claims against Mr Karantzis and Select

17    The knowing receipt and knowing assistance claims were brought against Select and Mr Karantzis. They related to iSignthis BVI’s transfer of ISX shares to Select in April 2019 and the demerger resolution: Reasons at [137] – [138]. The applicants relevantly pleaded, and were required to establish, that iSignthis BVI’s transfer of ISX shares to Select in April 2019 and the demerger resolution were a, or part of a, “dishonest and fraudulent” design, with knowing receipt of trust property by Mr Karantzis and Select, or knowing assistance from Mr Karantzis: Reasons at [145], [152] – [153].

18    The knowing receipt claim failed primarily because the applicants did not identify or seek to identify the trust property within the pool of ISX shares transferred to Select or explain on what basis the knowing receipt claim was made against Mr Karantzis, who did not receive any of the ISX shares. The knowing assistance claim against Mr Karantzis failed primarily because the applicants did not explain how it was put that the transfer of shares by iSignthis BVI was a, or part of a, “dishonest and fraudulent” design by iSignthis BVI and, as a result, that Mr Karantzis had assisted in such a design.

19    The respondents submitted that the applicants’ claims made serious allegations of fraud and dishonesty against Select and Mr Karantzis and that, the claims having failed, they were entitled to indemnity costs, relying on well-established authority such as Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233 (Sheppard J). In the Reasons, eg at [154], I was critical of the way the claims had been pleaded. The claims ultimately failed because the applicants failed to grasp the matters that they were required to establish. As a result, it was unnecessary to consider whether there was a basis to plead a dishonest and fraudulent design extending past mere breach of trust. The respondents did not put forward any other reason to justify an order for indemnity costs.

20    The misleading and deceptive conduct claim against Mr Karantzis failed in its entirety. The respondents submitted that Mr Karantzis should be granted indemnity costs in relation to this claim because it was a discrete claim that failed on multiple fronts, as set out in the Reasons at [180] – [188]. Beyond that, they did not explain on what basis Mr Karantzis was entitled to indemnity costs.

21    Notwithstanding the criticisms I made regarding the claims against Select and Mr Karantzis, I am not satisfied that the justice of this case requires a departure from the usual course of awarding costs on a party and party basis: Re Wilcox at 156–157 (Cooper and Merkel JJ). However, I accept the respondents’ submission that the claims were deficient and resulted in additional evidence, cross-examination and submissions that were otherwise unnecessary and the claims ultimately failed. As a result, Select and Mr Karantzis are entitled to their costs which is reflected in the reduction of the applicants’ recoverable costs as explained below at [24].

Conclusion as to apportionment of costs

22    As already mentioned, all of the respondents had the same legal representation and the respondents did not suggest that the costs which some of them incurred could be separated from other costs. Having estimated that 30% of the proceeding concerned the claims against Select and Mr Karantzis, the respondents sought an order in respect of 30% of their costs, which I regard as appropriate and I have accounted for that in the reduction of costs recoverable by the applicants.

23    I further accept the parties’ submission that the applicants’ entitlement to costs should be reduced to reflect the relative failures and successes of the claims and defences, with no order as to costs in favour of Select and Mr Karantzis. This will avoid the need for an assessment of the respondents’ costs and assist to bring matters to a close.

24    Making a broad and impressionistic assessment, I would reduce the applicants’ entitlement to costs by 10% on account of the lack of success on the rectification claim. I would further reduce the applicants’ entitlement to costs by 45% on account of the entitlement of Select and Mr Karantzis for their costs and the lack of success in the claims against Select and Mr Karantzis. That reduction reflects the costs incurred by the applicants in relation to the unsuccessful claims, and the costs incurred by the respondents in defending those claims, to which they would otherwise have been entitled.

25    The parties have not made submissions on the costs of determining the costs dispute, the subject of these reasons. In the interests of bringing the matter to a close, I will make no order as to costs in respect of the dispute on the question of costs, so that the costs will fall where they lie.

Other matters

Costs of Expert Evidence on Quantum

26    The expert evidence in respect of Period 3 was the only evidence before the Court on the question of equitable compensation: Reasons at [210] – [219]. The respondents submitted that the evidence of the applicants’ expert, Mr Johnson, in respect of Period 3 was “rejected” and therefore there was no basis for the applicants’ submission that they should have their costs of the expert evidence.

27    Expert evidence was led by both sides in relation to Periods 1 – 3 because of the alternative claims advanced by the applicants. As it turned out, Period 3 was the only period relevant to the breach of trust claim. However, having regard to the way the claims were put and the case was conducted, the parties understandably sought to adduce evidence in relation to Periods 1 – 3. The respondents challenged Mr Johnson’s evidence and he was cross-examined. His evidence in relation to Period 3 was not accepted for the reasons set out at [211] – [216] of the Reasons. However, those reasons reflect matters that arose from answers in cross-examination of the experts during concurrent evidence. The evidence was not simply “rejected” – Mr Johnson’s evidence in relation to Period 3 was not sufficiently well reasoned and explained, for the reasons given, for it to be accepted. Given the applicants were successful in obtaining an award of compensation for the breach of trust, and having assessed the expert evidence, I am satisfied that the applicants are entitled to their costs in respect of Mr Johnson’s expert evidence.

Security for Costs and Set-off

28    The applicants have paid a total of $362,000 as security for the respondents’ costs in the proceeding.

29    The parties agree that the applicants should pay the respondents’ party and party costs of and incidental to the applicants’ interlocutory application dated 26 June 2025, the applicants’ interlocutory application dated 5 August 2026 and the case management hearings on 23 July 2026 and 29 July 2026. The respondents submit that these costs should be paid out of the moneys held in Court as security for the respondents’ costs. The applicants seek the release of the moneys paid into Court.

30    While there was no evidence before the Court regarding the quantum of the parties’ costs, it is difficult to conceive that the amount payable in respect of the respondents’ costs of the interlocutory applications and case management hearings would exceed 45% of the applicants’ party and party costs of the proceeding. In the interests of bringing this matter to a close, in my assessment, the respondents’ costs orders should be set-off against the applicants’ costs orders, so that only the difference is required to be paid. As a result, it is unnecessary to preserve the security at this time. In the event that I may be wrong about the quantum of costs, there will be liberty to apply in respect of the release of the funds held in Court as security for the respondents’ costs.

Disposition

31    For the reasons set out above, I will make orders that iSignthis BVI pay 45% of the applicants’ party and party costs, excluding the period 15 July 2026 to 14 August 2026 and the costs in respect of the costs dispute, and that the applicants pay the respondents’ party and party costs of and incidental to the applicants’ interlocutory application dated 26 June 2025, the applicants’ interlocutory application dated 5 August 2026 and of the case management hearings on 23 July 2026 and 29 July 2026. I will also make orders for the set-off of the respondents’ costs against the costs payable to the applicants and for the release of the funds held in Court as security for the respondents’ costs, with liberty to apply.

Associate:

Dated:    6 November 2026