FEDERAL COURT OF AUSTRALIA GAIN Capital UK Limited v Citigroup Inc (No 3) [2016] FCA 582 Appeal from: Citigroup Inc v City Index Limited [2014] ATMO 36 File number: NSD 524 of 2014 Judge: MARKOVIC J Date of judgment: 26 May 2016 Catchwords: PRACTICE AND PROCEDURE – interlocutory application to amend application and pleadings and to file a further affidavit – success on interlocutory application – whether costs should follow the event where applicant seeking an indulgence Legislation: Federal Court of Australia Act 1976 (Cth) s 43 Cases cited: Bowen Energy Limited v 2KD Drilling Pty Ltd [2012] FCA 275 Finch v The Heat Group Pty Ltd (No 3) [2015] FCA 1084 Gee v Burger (No 3) (2009) NSWSC 1153 Golski v Kirk (1987) 14 FCR 143 Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40–748 Oztech Pty Ltd v Public Trustee of Queensland (No 4) [2016] FCA 268 Date of hearing: 22 March 2016 Registry: New South Wales Division: General Division National Practice Area: Intellectual Property Sub-area: Trade Marks Category: Catchwords Number of paragraphs: 15 Counsel for the Appellant: Mr J S Cooke with him Mr D B Larish Solicitor for the Appellant: Chrysiliou Lawyers Counsel for the Respondent: Mr N Murray with him Ms F St John Solicitor for the Respondent: Davies Collison Cave ORDERS NSD 524 of 2014 BETWEEN: GAIN CAPITAL UK LIMITED Appellant AND: CITIGROUP INC Respondent JUDGE: MARKOVIC J DATE OF ORDER: 26 MAY 2016 THE COURT ORDERS THAT: 1. The appellant to pay the respondent's costs of the interlocutory application filed on 29 February 2016. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT MARKOVIC J: 1 On 11 March 2016 I made orders and handed down judgment in relation to the interlocutory application filed by the appellant by which the appellant sought leave to file an amended notice of appeal, an amended reply to the respondent's statement of grounds relied upon in appeal proceedings dated 19 February 2016 (the Amended Pleadings) and an affidavit of Alexis Webster affirmed 18 February 2016 (the Affidavit). The orders made granted leave to the appellant, the applicant on the interlocutory application, to file and serve the Amended Pleadings and the Affidavit. Other consequential orders were made including an order that the hearing, then scheduled to commence on 11 April 2016, be vacated, that the matter be relisted to commence on 16 June 2016 and that the appellant pay the respondent's costs thrown away by reason of the filing of the Amended Pleadings and the Affidavit. 2 At the request of the appellant, I deferred the determination of the question of costs of the interlocutory application until after the parties had an opportunity to consider my judgment. That has now occurred and the parties have made submissions on that issue. LEGAL PRINCIPLES 3 The Court's power to award costs is found in s 43 of Federal Court of Australia Act 1976 (Cth). It is a broad power which gives the Court a wide discretion. The discretion must be exercised judicially. In Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40–748 at [48,136], Toohey J set out three principles on the exercise of the discretion based on the decided cases at the time: (1) in the absence of special circumstances costs follow the event; (2) the costs order should reflect the degree of success attained; and (3) a successful party may be ordered to pay some costs in respect of unsuccessful aspects of the case. 4 The costs in the present matter relate to an interlocutory application for leave to amend and to file an additional affidavit. That application was successful over opposition. Courts have dealt with the costs of such applications in different ways. 5 In Oztech Pty Ltd v Public Trustee of Queensland (No 4) [2016] FCA 268 (Oztech) Yates J considered the issue of an award of costs of and incidental to the hearing of an application for leave to amend the amended originating application and statement of claim filed by the applicant in those proceedings. The applicant's amendment application was only partially successful. 6 Leave was granted to the applicant to amend the statement of claim, provided certain conditions were satisfied, but leave to amend the amended originating application was refused. In his judgment, Yates J at [21] noted that the respondent opposed the application for leave to amend, that to an extent the respondent was successful in that opposition, in that leave was not granted to the applicant to amend to the extent that it sought, some amendments were allowed conditionally and the applicant was not permitted to further amend its amended originating application. Nonetheless, Yates J noted that the applicant achieved an "overall victory" on its application for leave to amend and that, as a result, the applicant was "justly entitled to an order for costs in its favour". However, his Honour found that the appropriate order was that the costs of and incidental to the application for leave to amend should be the applicant's costs in the cause. His Honour considered that an order of that nature achieved the appropriate balance between the relative degrees of success of each party. 7 In Gee v Burger (No 3) (2009) NSWSC 1153 (Gee v Burger), McLaughlin AsJ adopted a similar approach to that adopted by Yates J in Oztech. That matter involved a successful application by the plaintiffs for leave to amend their pleadings which was opposed by the first defendant. McLaughlin AsJ recognised the tension between the principle that costs should follow the event, which would result in the first defendant being required to pay the plaintiffs' costs of the application for leave to amend in circumstances, where ultimately the plaintiffs might not be successful in their final hearing and the principle that a party seeking leave to file an amended pleading is seeking an indulgence from the court, and that such party is usually required to pay the costs of the application granting that indulgence. In the result, McLaughlin AsJ ordered that the costs of the application for leave to amend should be the costs of the plaintiffs in the proceedings. 8 In contrast to the approach reflected in Oztech and Gee v Burger there is a line of authority to the effect that where a party seeks an indulgence from the court, which is granted, it should pay the costs of the application. In Golski v Kirk (1987) 14 FCR 143, a Full Court of this Court (Kelly, Beaumont and Ryan JJ) considered an appeal from an order allowing amendments to a statement of claim. The respondent to the appeal, who was the successful party before the primary judge, sought leave to cross-appeal against the order for costs made by the primary judge. In relation to that aspect of the matter at 157 Beaumont J, having observed that the primary judge had ordered that the respondent pay the costs of the application, continued: … Costs are, of course, discretionary, and it will only be in rare cases that leave to appeal from a decision to award costs will be granted. There is nothing extraordinary about the order for costs made by Miles CJ. On the contrary, it is usual for a party seeking an indulgence to pay the costs of the application, especially where, as here, the application throws up a difficult legal question. Since I propose to allow the appeal with costs, the question is now academic. I would refuse leave to cross appeal. 9 In Bowen Energy Limited v 2KD Drilling Pty Ltd [2012] FCA 275 Katzmann J considered an application by the applicant for leave to amend its application, statement of claim and a defence to the respondent's cross-claim. Her Honour categorised some of the proposed amendments as uncontroversial and others as controversial. In the result, Katzmann J granted leave to the applicant to amend. At [22] her Honour noted that, as the applicant was seeking an indulgence, it should pay the respondent's costs of the interlocutory application insofar as it concerned the application for leave to amend including the costs, if any, thrown away by reason of the amendments. In Finch v The Heat Group Pty Ltd (No 3) [2015] FCA 1084 Jessup J, in the context of an application for reinstatement of a proceeding, applied the same principle. That is, that a party required to respond to an application by another party for an indulgence should generally have his or her costs and made a costs order in favour of the respondents on that basis. CONSIDERATION 10 The appellant submits that, in light of the outcome of the hearing of the interlocutory application, costs should follow the event. That is, the appellant having secured orders for leave to file the Amended Pleadings and the Affidavit, over the opposition of the respondent, the respondent should pay its costs of the interlocutory application. The appellant relies on correspondence which passed between the solicitors for the parties to demonstrate that it wrote to the respondent early asking for its consent, yet the interlocutory application was opposed. The correspondence discloses that: (1) on 19 February 2016 the appellant's lawyers wrote to the respondent's lawyers enclosing a copy of, among other things, the Amended Pleadings, the Affidavit and proposed consent orders and sought the respondent's consent to the filing of the those documents as reflected in the proposed consent orders; and (2) on 25 February 2016 the respondent's solicitors wrote to the appellant's solicitors notifying the appellant that their client did not consent to the amendments sought and the reasons why that was so. 11 I do not think that in the circumstances of this matter costs should follow the event and that the respondent should bear the costs of the interlocutory application. Such an order would not do justice between the parties. The "success" in this case cannot be categorised in the same way as success at the end of a contested final hearing. Here the appellant was seeking and obtained an indulgence from the Court. Nor does the fact that the respondent opposed the application lead me to the conclusion that, it having not been successful in that opposition, it should pay the appellant's costs. There were a number of issues to resolve in the context of the interlocutory application, including the vacation of the hearing date, should the filing of the Amended Pleadings and the Affidavit be allowed, and the costs consequences of any vacation of the hearing date. While the appellant ultimately consented to paying the costs thrown away occasioned by the filing of the Amended Pleadings and the Affidavit, that consent only came on the morning of the hearing of the interlocutory application. 12 In the alternative the appellant submits that, if the Court is not minded to make an order that the respondent should pay its costs of the interlocutory application then, adopting the approach of Yates J in Oztech, the appropriate costs order is that the costs of the interlocutory application should be the appellant's costs in the proceedings. It would then follow that the respondent would only have to pay those costs if the appellant was ultimately successful in its appeal. 13 That is an available approach. However, I am not persuaded that it should be adopted in the circumstances of this matter. The appellant sought and was granted an indulgence by the Court. The appellant submits that the order made on 11 March 2016 that it pay the respondent's costs thrown away occasioned by the filing of the Amended Pleadings and the Affidavit, an order to which the appellant consented, was directed towards the indulgence that was granted by the Court and that the interlocutory application and the question of costs on that application are distinct. I disagree. The order made on 11 March 2016 was to compensate for the costs thrown away by reason of the leave granted to file the Amended Pleadings and the Affidavit. That order did not go to the indulgence that was sought by the appellants namely, the seeking of leave to file the Amended Pleadings and the Affidavit, which was granted. The order for costs thrown away addressed the consequences of the indulgence sought by the appellant. 14 The respondent was required to respond to the appellant's application seeking an indulgence. It did so properly. It needed to secure a new trial date and to adduce evidence to establish the prejudice giving rise to the need for a new trial date. It cannot be criticised for taking that approach. In my opinion the appropriate order is that the appellant should pay the respondent's costs of the interlocutory application. There is no reason in this matter to depart from the approach adopted in the judgments referred to at [8] and following above in relation to an award of costs in respect of a party seeking an indulgence. CONCLUSION 15 I will make an order that the appellant pay the respondent's costs of the interlocutory application filed on 29 February 2016. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Markovic. Associate: Dated: 26 May 2016