FEDERAL COURT OF AUSTRALIA Scott v Bagshaw [2001] FCA 1 JOHN JOSEPH SCOTT v LEITH GORDON BAGSHAW, JUDITH HAMPTON BAGSHAW AND PHILLIP GREGORY JEFFERSON AND JAY ARSCOTT STEVENSON as Trustees of the bankrupt estate of Leith Gordon Bagshaw NG 684 of 1994 DRUMMOND, RD NICHOLSON AND KATZ JJ 15 JANUARY 2001 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 684 OF 1994 ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: JOHN JOSEPH SCOTT APPELLANT AND: LEITH GORDON BAGSHAW FIRST RESPONDENT JUDITH HAMPTON BAGSHAW SECOND RESPONDENT PHILLIP GREGORY JEFFERSON AND JAY ARSCOTT STEVENSON as Trustees of the bankrupt estate of Leith Gordon Bagshaw THIRD RESPONDENT JUDGES: DRUMMOND, RD NICHOLSON AND KATZ JJ DATE OF ORDER: 15 JANUARY 2001 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Each party bear that party's costs of the proceeding before the learned primary judge and of the appeal. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 684 OF 1994 ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: JOHN JOSEPH SCOTT APPELLANT AND: LEITH GORDON BAGSHAW FIRST RESPONDENT JUDITH HAMPTON BAGSHAW SECOND RESPONDENT PHILLIP GREGORY JEFFERSON AND JAY ARSCOTT STEVENSON as Trustees of the bankrupt estate of Leith Gordon Bagshaw THIRD RESPONDENT JUDGES: DRUMMOND, RD NICHOLSON AND KATZ JJ DATE: 15 JANUARY 2001 PLACE: SYDNEY REASONS FOR JUDGMENT THE COURT: 1 When the Court allowed the appeal from the order of the learned primary judge staying the action for want of jurisdiction and remitted the matter to the primary judge for determination on the merits, it invited submissions from the parties on the costs orders that should be made in relation to both the proceedings before the learned primary judge and on appeal, for the reasons set out in par [27] of the Court's judgment. 2 The parties' submissions on costs clarify the position. 3 Following the decision in Re Wakim; Ex parte McNally (1999) 198 CLR 511, there was raised for the decision of the learned primary judge the question whether the Court had jurisdiction to continue to deal with the matter. The action had long then been running in this Court; in September 1998, the learned primary judge, after a hearing extending over five days, gave judgment dismissing the action on the ground of the appellant's lack of standing. In May 1999, this Court upheld the present appellant's appeal and remitted the matter to the learned primary judge to determine any outstanding issues necessary to conclude the matter. It was following judgment in this appeal that the High Court delivered its judgment in Re Wakim. All parties were concerned to keep the matter in this Court. If it were to be continued in the Supreme Court of New South Wales pursuant to the Federal Courts (State Jurisdiction) Act 1999 (NSW), that Court would, for practical reasons, have had to hear the whole matter anew. It was in these circumstances that the issue of jurisdiction was raised for the decision of the learned primary judge. 4 The parties co-operated in bringing this issue before his Honour in that the present appellant, with the support of the first respondent, contended that this Court had jurisdiction; the second respondent did not take part in the hearing before the learned primary judge on this issue (though she says in the submissions now made that it has always been her desire for the proceedings to continue in this Court), while the third respondents only argued against jurisdiction to ensure there was a contradictor, a position that appears to have been adopted after discussion with the appellant. 5 On the appeal, the third respondents provided written submissions supporting the judgment below on the express assumption that they were prepared to do that only if no other party was prepared to argue in support of that judgment. On the hearing of the appeal, the first respondent consistently with his position below, supported the submissions of the appellant. The second respondent, however, appeared by counsel on the appeal, who argued against the Court having conferred, though not accrued jurisdiction. Notwithstanding that, counsel for the second respondent, in her submissions on costs, asserts that it has always been the second respondent's desire that the proceedings continue to be heard in the Federal Court before the learned primary judge because of the costs savings involved, in comparison with the position if the trial has to begin afresh in the Supreme Court. 6 The appellant accepts that he ought not to have his costs unconditionally, but submits that the costs both of the hearing before the learned primary judge on the issue of jurisdiction and the costs of this appeal should be each party's costs in the cause, which, as a result of that appeal, will continue before the learned primary judge. The second respondent makes the same submission. The first and third respondents both submit that there should be no order as to costs of the proceedings below or of the appeal. 7 The first respondent makes a submission in the alternative, that the costs of all parties should be "paid out of the Federal Court funds". While it is understandable that the first respondent should assert that the parties should not have to bear the costs of proceedings that only became necessary by reason of the decision in Re Wakim, there is no fund under the control of this Court available to meet such claims. The alternative submission of the second respondent is that, if any costs order in favour of the appellant is made against her, she should have a certificate under s 6(1) the Federal Proceedings (Costs) Act 1981 (Cth). The second respondent also asserts that she is impecunious and that a costs certificate should be granted to the appellant under s 7(1) if an order in his favour is made against her. The difficulty with this last submission is that there is no evidence, only her counsel's submission, that the second respondent is relevantly impecunious and there is no application under s 7(1) by the appellant for a certificate. 8 The appellant failed to persuade the learned primary judge that he had jurisdiction to continue to hear the matter, but succeeded in showing jurisdiction on appeal on arguments not put to the learned primary judge. In these circumstances, we do not think any order should be made in respect of the costs below in his favour. The second respondent did not appear in those proceedings and the first and third respondents do not ask for their costs. There should be no orders for costs in favour of any of the respondents in respect of the proceedings below. 9 The appellant contends that the justification for an order visiting on those parties who turn out ultimately to be unsuccessful in the litigation, the successful party or parties' costs of this appeal, is that the argument on jurisdiction will, in the event of his success, have been a necessary step in the obtaining of his verdict. If he fails, he accepts that he should bear the appeal costs of the successful parties as part of the costs he imposed on them by choosing to sue them. 10 There is some substance in this argument, though the first and third respondents are content to bear their own costs, irrespective of the final outcome of the litigation. I consider that the decision in Re Wakim which precipitated the present proceedings should be regarded as an event which, being outside the control of the parties, justifies the Court in leaving all parties to bear their own costs of the appeal. Cf Inground Constructions Pty Ltd v Federal Commissioner of Taxation (1994) 94 ATC 4,046 at 4,048. 11 Each party bear that party's costs of the proceeding before the learned primary judge and of the appeal. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court. Associate: Dated: 15 January 2001 Counsel for the Appellant: Dr C Birch SC Solicitor for the Appellant: Church & Grace Counsel for the First Respondent: Mr GA Stevens Counsel for the Second Respondent: Ms EA Cohen Counsel for the Third Respondents: Ms J Oakley and Mr H Woods Solicitor for the Third Respondents: Camatta Lempens Date of Judgment: 15 January 2001