FEDERAL COURT OF AUSTRALIA Liberty Financial Pty Ltd v Scott [2003] FCA 293 PRACTICE & PROCEDURE – costs – applicants unsuccessful in seeking order that issues of liability and quantum be tried separately – whether costs should follow the event. LIBERTY FINANCIAL PTY LTD (ACN 077 248 983) AND SHERMAN MA v TREVOR WILLIAM SCOTT AND BLUESTONE GROUP PTY LIMITED T/A BLUESTONE MORTGAGES (ACN 091 201 357) V1256 of 2001 WEINBERG J 2 APRIL 2003 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA DISTRICT REGISTRY V1256 OF 2001 BETWEEN: LIBERTY FINANCIAL PTY LTD (ACN 077 248 983) FIRST APPLICANT SHERMAN MA SECOND APPLICANT AND: TREVOR WILLIAM SCOTT FIRST RESPONDENT BLUESTONE GROUP PTY LTD t/a BLUESTONE MORTGAGES (ACN 091 201 357) SECOND RESPONDENT JUDGE: WEINBERG J DATE OF ORDER: 2 APRIL 2003 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The applicants pay the respondents' costs of and incidental to the notice of motion filed on 28 February 2003. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA DISTRICT REGISTRY V1256 of 2001 BETWEEN: LIBERTY FINANCIAL PTY LTD (ACN 077 248 983) FIRST APPLICANT SHERMAN MA SECOND APPLICANT AND: TREVOR WILLIAM SCOTT FIRST RESPONDENT BLUESTONE GROUP PTY LTD t/a BLUESTONE MORTGAGES (ACN 091 201 357) SECOND RESPONDENT JUDGE: WEINBERG J DATE OF ORDER: 2 APRIL 2003 WHERE MADE: MELBOURNE REASONS FOR JUDGMENT 1 On 28 February 2003 the applicants in this proceeding, Liberty Financial Pty Ltd and Mr Sherman Ma, filed a notice of motion seeking an order that the issues of liability and quantum be tried separately. That motion was made returnable on 18 March 2003. On 21 March 2003 I dismissed that application. I also directed that the parties file and serve brief written submissions regarding costs. Those submissions have now been filed. 2 In dismissing the notice of motion, I concluded that no time would be saved by ordering that liability and quantum be tried separately. I also expressed concern about the effect which an order for separation might have upon the future conduct of the proceeding if I were to make strongly adverse findings regarding the credibility of one or more key witnesses during the liability phase of the trial. I concluded that, on the material before me, the balance tilted significantly in favour of applying the general principle against the separation of issues at trial. 3 The applicants submit that, notwithstanding the fact that their application was refused, they should not be required, at this stage, to pay costs. Presumably, they contend that costs should be reserved, or alternatively, be costs in the cause. In support of that contention, they point to the complexity of the case. They also point to the fact that, by reason of my decision, the process of discovery will be significantly more onerous, and that it was reasonable, on their part, to seek to obviate that consequence. They note that in Energy Australia v Australian Energy Limited [2001] FCA 1049, a case in which an application for separation was refused, Stone J nevertheless ordered that costs be costs in the cause, and not costs in favour of the party which resisted the application. The basis for that order was that the application, though unsuccessful, had been "properly brought". 4 The respondents, on the other hand, submit that they should recover the costs of and incidental to the notice of motion. 5 The first respondent notes that at no time prior to the date on which the notice of motion was filed did the applicants seek his views regarding the application. He submits that although the Court has a very wide discretion regarding costs, the ordinary rule is that costs should follow the event: Gladstone Park Shopping Centre Pty Ltd v Wills (1984) 6 FCR 496 per Davies J at 505 and per Beaumont J (with whom Northrop J agreed) at 509. 6 He further submits that there is no basis for departing from that rule in the present case. He claims that he acted both "reasonably and sensibly" in opposing the application. He relies upon the reasons I gave in dismissing the notice of motion. He also draws attention to a number of cases where costs have been ordered against parties who unsuccessfully sought orders for separation. 7 The second respondent adopts the submissions of the first respondent. In addition, it says that the application was brought prematurely. No sensible estimate could be given of the amount of time that might be saved by separating liability from quantum until discovery had taken place. 8 In my opinion, the applicants should be required to pay the respondents' costs of and incidental to the notice of motion. It was incumbent upon them to point to circumstances which warranted a departure from the general principle against the separation of issues at trial. They failed to provide any sufficient basis for a departure from that general principle. Neither the fact that their case involved a claim alleging breach of confidence, nor the fact that they sought, as part of their relief, an account for profits (which would require up to date evidence regarding the profits made from any wrongdoing on the part of the respondents) was sufficient. In addition, the evidence adduced in support of the application was largely based on conjecture. In my view, there is substance in the claim that the application was brought prematurely. In those circumstances, I can see no reason why costs should not follow the event. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg. Associate: Dated: 2 April 2003 Counsel for the Applicants: Mr R Kendall QC with Mr A Panna Solicitor for the Applicants: Jerrard and Stuk Lawyers Counsel for the First Respondent: Mr P J Jopling QC with Mr A J Maryniak Solicitor for the First Respondent: Allens Arthur Robinson Counsel for the Second Respondent: Mr S M Anderson Solicitor for the Second Respondent: Freehills Date of Hearing: 2 April 2003 Date of Judgment: 31 March 2003