FEDERAL COURT OF AUSTRALIA Paciocco v Australia and New Zealand Banking Group Limited (No 2) [2014] FCA 254 Citation: Paciocco v Australia and New Zealand Banking Group Limited (No 2) [2014] FCA 254 Parties: LUCIO ROBERT PACIOCCO and SPEEDY DEVELOPMENT GROUP PTY LTD (ACN 006 835 383) v AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (ACN 005 357 522) File number: VID 196 of 2013 Judge: GORDON J Date of judgment: 19 March 2014 Date of hearing: Determined on the papers Date of last submissions: 7 March 2014 Place: Melbourne Division: GENERAL DIVISION Category: No catchwords Number of paragraphs: 10 Counsel for the Applicants: MBJ Lee SC with JF Richardson and WAD Edwards Solicitor for the Applicants: Maurice Blackburn Counsel for the Respondent: AC Archibald QC with MH O'Bryan SC and C Van Proctor Solicitor for the Respondent: Ashurst Australia IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 196 of 2013 BETWEEN: LUCIO ROBERT PACIOCCO First Applicant SPEEDY DEVELOPMENT GROUP PTY LTD (ACN 006 835 383) Second Applicant AND: AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (ACN 005 357 522) Respondent JUDGE: GORDON J DATE OF ORDER: 19 MARCH 2014 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. There be no orders as to costs, including reserved costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011 (Cth). IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 196 of 2013 BETWEEN: LUCIO ROBERT PACIOCCO First Applicant SPEEDY DEVELOPMENT GROUP PTY LTD (ACN 006 835 383) Second Applicant AND: AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (ACN 005 357 522) Respondent JUDGE: GORDON J DATE: 19 MARCH 2014 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 The facts and background to these proceedings are set out in the reasons for judgment published on 5 February 2014: Paciocco v Australia and New Zealand Banking Group Limited [2014] FCA 35 (Substantive Reasons). I adopt the same defined terms in these reasons for judgment. Orders were made to give effect to the Substantive Reasons on 13 February 2014. 2 The parties now seek orders in relation to the costs of the substantive hearing. The Applicants submitted that the appropriate order is that the parties bear their own costs of the proceeding and that the Court should make no order as to costs, including as to reserved costs, save that the Respondent (ANZ) should pay the Applicants' costs of and incidental to: (a) Mr Regan's production of his late payment report filed on 11 October 2013; (b) Mr Regan's participation in the joint conclave and production of the joint report of 29 November 2013; (c) Mr Regan's costs of attendance at the substantive hearing; (d) The expert reports of Mr Inglis, Dr Finch and Dr Jenkins; and (e) A document filed by ANZ entitled "Statement of the findings of fact arising out of the assumptions relied upon by William Inglis in his expert reports". The categories identified in subparagraphs (a)-(e) will be referred to as the "Applicants' Expert Costs". 3 ANZ's position was diametrically to the opposite effect. It submitted that two costs orders should be made, namely: 1. ANZ pay one sixth of the costs of the Applicants; and 2. The Applicants pay five sixths', and a further one sixtieth, of the costs of ANZ, excluding the costs of and incidental to adducing the evidence of Dr Finch. (ANZ does not seek its costs of adducing the report of Dr Finch). Put simply, the parties' perspectives about the outcome were different. 4 The applicable principles in respect of costs are not in dispute: see, by way of example, Probiotec Limited v The University of Melbourne (2008) 166 FCR 30 at 42-44; [2008] FCAFC 5 at [45]-[51] and Kazar (Liquidator) v Kargarian; In the Matter of Frontier Architects Pty Ltd (In Liq) (2011) 197 FCR 113 at 115-117; [2011] FCAFC 136 at [3]-[9]. The Court's discretion to order costs under s 43 of the Federal Court of Australia Act 1976 (Cth) (FCA) is at large and ought not be read down otherwise than in accordance with accepted principle: Cirillo v Consolidated Press Property Ltd (formerly known as Citicorp Australia Limited) (No 2) [2007] FCA 179 at [3]. The accepted principles include (1) costs ordinarily follow the event; (2) an order for costs is intended to compensate the successful party, not to punish the unsuccessful party (Demetriou v Gusdote Pty Ltd (2010) 78 ACSR 566 at 576); (3) fairness should dictate how the discretion is exercised (Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107 at [5]); (4) the circumstances of each individual case must be considered; (5) the circumstances usually include an evaluation of the real degree or degrees of success and failure; and (6) the order should best promote the overarching purpose in s 37M of the FCA, including the need for parties to conduct litigation as quickly, inexpensively and efficiently as possible. 5 What then is the appropriate costs order? The substantive claims between the parties have been heard and determined. Those substantive claims concerned six types of fees charged by ANZ – late payment fees, overlimit fees, saving honour fees, business honour fees, business dishonour fees and saving non-payment fees. Seventy two Exception Fees were considered: see Annexure 1 to the Substantive Reasons. Several causes of action were maintained in respect of each fee. ANZ succeeded in respect of overlimit fees, saving honour fees, business honour fees and business dishonour fees. The Applicants succeeded in respect of saving non-payment fees and the penalty claim in respect of late payment fees. 6 However, that broad listing of the successes and failures does not accurately or completely describe the overall picture. Other matters are worth recording. 7 First, ANZ conceded liability in respect of saving non-payment fees after the hearing had completed. Second, in respect of late payment fees, ANZ maintained only "formally" a submission that the fees were not payable on breach of contract. 8 Third, the factual underpinning to the various causes of action was "dense" and, to the credit of the parties, was the subject of substantial agreement between them. That is not to say that the case was not hard fought. It was. However, by reason of the cooperation and conduct of the parties and their legal advisers, the hearing of the substantive issues ran only five days. Fourth, as the Substantive Reasons explain, the expert evidence was in many respects irrelevant and unhelpful: see [138]-[140], [169], [209]-[210] of the Substantive Reasons. Indeed, as is apparent from the orders sought by ANZ, ANZ appears now to concede that to be the position in respect of Dr Finch. Fifth, although it is possible to identify specific successes and failures in general terms, the form and content of the factual underpinning of the various claims, as well as the legal analysis, was inextricably linked across fee types and periods. The issues were not wholly severable. In any event, it is unwise to be too technical about what is an event or issue: see, by way of example, Fexuto Pty Ltd v Bosnjak Pty Ltd (No 3) (1998) 30 ACSR 20 at 22 and Abigroup Contractors Pty Ltd v Peninsula Balmain Pty Ltd (No 2) [2001] NSWSC 1016 at [40]. Sixth, there is no suggestion that the Applicants pursued any aspect of their case improperly or unreasonably. 9 The form of orders sought by both the Applicants and ANZ are inappropriate. The fact that ANZ seeks five sixths', and a further one sixtieth, of its costs, is evidence itself that the allocation it seeks in the case of a mixed result is unworkable and should not be adopted. Such an allocation would not accurately reflect the proper exercise of the discretion under s 43 of the FCA. In addition, orders of such mathematical precision have an air of artificiality about them. They are not only unlikely to be conducive to simplicity in framing a costs order, the implementation of them (including any resolution of the costs issues) is unlikely to be consistent with s 37M of the FCA. The approach adopted by the Applicants also suffers from significant problems. The Applicants have identified no bases, and I am unable to identify any basis, for treating separately the "Applicants' Expert Costs". The Applicants' proposal suffers from the same air of artificiality and would raise many of the same issues in seeking to allocate costs on an issue by issue basis where the result is mixed. Indeed, elements of the "Applicants' Expert Costs" had to be incurred by the Applicants regardless of the manner in which ANZ conducted its defence of the proceedings. 10 For those reasons, in the exercise of the discretion under s 43 of the FCA, the appropriate order is that there should be no orders as to costs, including reserved costs. That costs result is fairer than any alternative and, in my view, accords with the justice of the case. I accept that this judgment is an evaluative one. However, it is an evaluative one taking into account the Substantive Reasons, the contextual circumstances of the litigation from its commencement, the conduct of the parties and my overall impression that the outcome of the litigation may best be described as "evenly balanced". This is not a case where it is appropriate to erect a scoreboard and seek to tally the wins and losses by issue and, further or alternatively, by witness or kind of evidence. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon. Associate: Dated: 19 March 2014