FEDERAL COURT OF AUSTRALIA O'Neill v Piscopo (No 4) [2012] FCA 1225 Citation: O'Neill v Piscopo (No 4) [2012] FCA 1225 Appeal from: Rose & Ors v Piscopo [2010] FMCA 948 Parties: MICHAEL O'NEILL v SAMUEL PISCOPO and TERRY HILL File number: NSD 52 of 2011 Judge: COLLIER J Date of judgment: 7 November 2012 Catchwords: COSTS – application for award of costs on indemnity basis – appeal comprehensively dismissed – whether special or unusual features to justify indemnity costs – whether grounds of appeal such that appeal would inevitably fail – whether appeal commenced for ulterior motives Legislation: Federal Court of Australia Act 1976 (Cth) s 43 Cases cited: Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 cited De Alwis v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 77 cited InterTAN Inc v DSE (Holdings) Pty Ltd [2005] FCAFC 54 cited Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 cited O'Neill v Piscopo (No 3) [2012] FCA 1036 cited Date of hearing: 19 September 2012 Place: Brisbane Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 9 Solicitor for the Appellant: Mr M Stevens of O'Neill Partners Solicitor for the First and Second Respondents: Mr J Kekatos of Proctor & Associates IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION NSD 52 of 2011 ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA BETWEEN: MICHAEL O'NEILL Appellant AND: SAMUEL PISCOPO First Respondent TERRY HILL Second Respondent JUDGE: COLLIER J DATE OF ORDER: 7 NOVEMBER 2012 WHERE MADE: BRISBANE THE COURT ORDERS THAT: The appellant pay the costs of the first respondent on a party and party basis, to be taxed if not otherwise agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION NSD 52 of 2011 ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA BETWEEN: MICHAEL O'NEILL Appellant AND: SAMUEL PISCOPO First Respondent TERRY HILL Second Respondent JUDGE: COLLIER J DATE: 7 NOVEMBER 2012 PLACE: BRISBANE REASONS FOR JUDGMENT 1 In O'Neill v Piscopo (No 3) [2012] FCA 1036 I ordered that the appellant's application for leave to appeal against the judgment of a Federal Magistrate in these proceedings be refused, and the appeal be dismissed. At the time of delivering judgment I also ordered that the parties file submissions as to costs. The parties have done so, and I now turn to that issue. 2 In summary, the unsuccessful appellant submits that there is no reason for the Court to depart from the usual approach in such circumstances, namely that costs, on a party and party basis, follow the event. The first respondent contends however that the Court should order costs against the appellant on an indemnity basis. This is because, in summary: My findings in O'Neill v Piscopo (No 3) support the inference that the appeal was brought for reasons other than a belief by Mr O'Neill that he had prospects of obtaining leave and succeeding in the appeal. A litigant has an obligation to objectively evaluate whether he or she has a right of appeal and whether leave is required. Mr O'Neill is an experienced insolvency lawyer. It may be inferred that the failure to seek leave was deliberate as there was a real risk that leave would be refused because Mr O'Neill was a minor creditor and it was not inappropriate for him to be examined by Mr Hill's trustee in bankruptcy. Alternatively, an inference may be drawn that Mr O'Neill did not consider the basis and merits of his appeal and simply appealed because he did not like the outcome in the Court below, without considering the merits of any appeal. Supportive of this inference are the following facts: o that in earlier proceedings Emmett J refused leave to appeal in relation to the order dismissing the application to set aside the examination summons; o at the same time, Emmett J also ordered Mr O'Neill to file a further draft supplementary notice of appeal; o Mr O'Neill ought to have reconsidered his prospects of success at that point; o instead, Mr O'Neill relied upon an extensive list of grounds of appeal without identifying real issues deserving of leave; and o not even one of the extensive grounds of appeal was made out. Consideration 3 The discretion of the Court to award costs is found in s 43 of the Federal Court of Australia Act 1976 (Cth). In the usual case where costs follow the event, it is customary for the Court to order costs against the unsuccessful party on a party and party basis although the Court has a wide and unfettered discretion to award costs on an indemnity basis in appropriate cases: Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 231-234. As a general proposition however, before the Court orders indemnity costs against a party the case must exhibit special or unusual features to justify the Court exercising its discretion in this way: InterTAN Inc v DSE (Holdings) Pty Ltd [2005] FCAFC 54 at [11]. Situations where the Court may be inclined to order indemnity costs against an unsuccessful appellant include: where a proceeding is commenced or continued in circumstances where the applicant properly advised should have known there was no chance of success; where groundless allegations have been made; where an application is brought and prosecuted not for the bona fide purpose of protecting and enforcing a legal right, but rather to achieve an ulterior or extraneous purpose; and where there has been some relevant delinquency on the part of the unsuccessful party. (De Alwis v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 77 at [6]; InterTAN Inc at [11].) 4 In this case I am not persuaded that the circumstances of this case warrant an order against the appellant on an indemnity basis, for the following reasons. 5 First, while the appellant's appeal was comprehensively dismissed, I am not persuaded that the grounds of appeal were so without foundation that an appellant properly advised should have known that there was no chance of success, or that – as contended by the first respondent – an experienced insolvency practitioner should have been aware that the appeal would inevitably fail. Litigation is inescapably chancy and properly argued grounds of appeal may nevertheless fail (Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 725). 6 Second, although there is clearly ill-feeling between the parties I am not satisfied that the appellant commenced an appeal for ulterior motives and without regard to his chances of success or the merits of his grounds of appeal. 7 Third, while leave to appeal was not sought, I note that Emmett J directed that the question of leave and the merits of the appeal itself be heard together. This is not an unusual approach in respect of hearing an appeal. I can identify no prejudice suffered by the first respondent in respect of this approach. 8 Finally, the case before me was argued over the course of a day by experienced Counsel on both sides, instructed by experienced solicitors. While I note that Mr O'Neill is apparently a friend of the bankrupt in this case, it is difficult to see an experienced solicitor being drawn into doomed litigation, where there was no prospect of success, and where an award of costs would almost invariably be made against the unsuccessful party. 9 The appropriate course is to order that the appellant pay the costs of the first respondent on a party and party basis, to be taxed if not otherwise agreed. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier. Associate: Dated: 6 November 2012