FEDERAL COURT OF AUSTRALIA Australian Securities and Investments Commission v Cassimatis (No 7) [2016] FCA 624 File number: QUD 574 of 2010 Judge: EDELMAN J Date of judgment: 4 June 2016 Catchwords: COSTS – appropriate order for costs following amendment to pleading – whether previous costs orders should be reopened – manner in which costs should be assessed Legislation: Corporations Act 2001 (Cth) ss 180(1), 206E Cases cited: Australian Securities and Investments Commission v Cassimatis [2013] FCA 641; (2013) 220 FCR 256 Media Ocean Limited v Optus Mobile Pty Limited (No 6) [2009] FCA 1319 Date of hearing: Determined on the papers Date of last submissions: 3 June 2016 (Applicant) Registry: Queensland Division: General Division National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Category: Catchwords Number of paragraphs: 18 Counsel for the Applicant: Mr P Davis QC with Mr S Cooper and Ms S Robb Solicitor for the Applicant: Australian Securities and Investments Commission Counsel for the Respondents: Mr P Franco QC Solicitor for the Respondents: Russells Table of Corrections 31 August 2016 In paragraph 1, "2011" has been replaced with "2001". ORDERS QUD 574 of 2010 BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Applicant AND: EMMANUEL GEORGE CASSIMATIS First Respondent JULIE GLADYS CASSIMATIS Second Respondent JUDGE: EDELMAN J DATE OF ORDER: 4 JUNE 2016 THE COURT ORDERS THAT: 1. The applicant pay the respondents' costs of the applicant's application for leave to amend filed on 27 May 2016 to be taxed if not agreed. 2. The applicant pay the respondents' costs of amendment to their defence occasioned by the applicant's amendment, to be taxed if not agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT EDELMAN J: Introduction 1 Last week I allowed ASIC to amend its originating application and statement of claim to raise a new point of law based on s 206E of the Corporations Act 2001 (Cth). Following this decision, the parties proposed an adjournment of three days to allow amendments to the defence to be made and for mediation talks to continue. I granted the adjournment, and reserved costs so that senior counsel could confer in an attempt to reach agreement on costs. No agreement was reached. The parties filed competing submissions. They agreed that the costs issues should be determined on the papers. These are my reasons for the costs orders arising from ASIC's amendment application. 2 The Cassimatises submit that the following costs orders should be made: (1) ASIC should pay the costs of the Cassimatises for ASIC's application for leave to amend filed on 27 May 2016; (2) ASIC should pay the costs of the Cassimatises of the consequential amendments to their defence; (3) ASIC should pay the costs of the Cassimatises of the application, filed by the Cassimatises on 12 February 2012, to the extent it sought summary judgment; (4) ASIC should pay the costs of the Cassimatises of the application, filed by the Cassimatises on 22 July 2013, for leave to appeal the dismissal of the application for summary judgment; (5) ASIC should pay the costs of the Cassimatises of the notice of appeal filed by the Cassimatises on 6 December 2013; and (6) ASIC should pay the costs of (3) to (5) on an indemnity basis. 3 For the reasons below, the only costs orders that should be made are (1) and (2). Costs of the application for leave to amend and the consequential amendments to the defence 4 The usual order where opposition to an application to amend is not unreasonable is that the party who applies to amend must pay the costs of the application for leave to amend and the costs occasioned by and thrown away as a consequence of the amendment: Media Ocean Limited v Optus Mobile Pty Limited (No 6) [2009] FCA 1319 [34] (Jagot J). 5 ASIC properly accepts that it should pay the costs of the application to amend. These costs will not include all of the costs of the first two days prior to the adjournment because some of that time was occupied by hearing opening submissions, objections to evidence, and other matters. The appropriate proportion will be a matter for the taxing officer. 6 It is appropriate that these costs be taxed in the usual manner after the determination of this matter. Any set off concerning costs orders can be addressed at that time. For the reasons explained below at [17], I am not satisfied that ASIC's conduct requires any departure from this usual basis for assessment of costs. Costs of the summary judgment application, leave to appeal, and the notice of appeal 7 In 2013, the Cassimatises brought a summary judgment application against ASIC. The Cassimatises sought summary judgment in relation to the whole of the proceedings, or alternatively to strike out various parts of ASIC's statement of claim. The strike out application was adjourned pending determination of the summary judgment application. 8 The summary judgment application by the Cassimatises alleged that there was no arguable case that could be made against them based on s 180(1) of the Corporations Act. That application was unsuccessful. The primary judge explained in his reasons that the proceedings "involve the sorts of complex and difficult factual and legal disputes that warrant them being determined at a trial": Australian Securities and Investments Commission v Cassimatis [2013] FCA 641; (2013) 220 FCR 256, 283 [176] (Reeves J). 9 On 24 July 2013, the primary judge made an order that the Cassimatises pay ASIC's costs of the summary judgment application. 10 An appeal from the summary judgment application was dismissed by consent. A central reason for the dismissal of the appeal was the state of ASIC's pleading. Costs orders were made in favour of the Cassimatises on the appeal. However, the summary judgment costs order was not disturbed. 11 During the course of oral submissions last week concerning ASIC's proposed amendments to include a claim based on s 206E of the Corporations Act, senior counsel for ASIC submitted that the costs incurred by the Cassimatises were "a matter which we say could be addressed by a costs order. Whatever has happened in the past that has happened, the point we've reached now is that we seek to raise section 206E" (ts 47). In my reasons, I accepted the evidence of the Cassimatises that they would not have brought the summary judgment application if s 206E had been pleaded earlier by ASIC. At the conclusion of the hearing, after I allowed ASIC's amendment, I expressed a provisional view that the appropriate costs order would be that ASIC pay the Cassimatises' costs thrown away by the amendments, which costs would include the costs of the summary judgment application. That is now the subject of this dispute. 12 The Cassimatises rely upon the changed circumstance that a claim is now brought based on s 206E, and that summary judgment would not have been sought if that claim had been brought earlier. They submit that I should set aside the primary judge's costs order in relation to the summary judgment and order that (i) ASIC pay those costs as well as (ii) the costs of the Cassimatises' application for leave to appeal and (iii) their notice of appeal. No party referred to any costs order which had been made in relation to (ii) or (iii). It is not clear whether such costs orders were made or not. 13 ASIC submits that these questions of costs should be determined after my decision in relation to the present action. 14 For three reasons, I accept ASIC's submission. 15 First, although there is no jurisdictional obstacle to setting aside a costs order (even if the costs order has been perfected, which has not occurred in this case) based upon changed circumstances, this is a significant step. There is a public interest in finality of interlocutory orders, particularly costs orders. This finality concern might only apply to the Cassimatises' costs of summary judgment (ie category (i) above if no costs orders were made in relation to categories (ii) and (iii)), but the Cassimatises did not suggest that a costs determination should be made in relation to some, but not all, of these overlapping categories. 16 Secondly, if the primary judge's costs orders in relation to (i) were to be set aside based upon changed circumstances then it would be appropriate for all the relevant circumstances to be considered. It might be relevant to the exercise of my discretion in relation to each of the costs orders in categories (i), (ii), and (iii) to consider whether, and any manner in which, ASIC is ultimately successful in relation to its claim concerning s 180(1) or s 206E or both. 17 Thirdly, although this amendment comes after a history of amendments by ASIC to its pleading, I am not satisfied that ASIC's conduct is a factor which provides any substantial weight to determine these costs issues now. As ASIC frankly explained in the affidavits of Mr Copley and Mr Kingston, the reason why the amendment was made so late was simply an oversight about this matter of law. I do not consider that this oversight could be characterised as negligent or unreasonable, although with the benefit of hindsight this point of law should have been noticed much earlier. The issue concerning the possible alternative application of s 206E of the Corporations Act was not a matter which was noticed by the primary judge during the summary judgment application. It was not noticed by the Full Court during the hearing of the appeal. It was not noticed by me at any stage during the last year in which I have case managed this matter. In short, it had not been raised by any party, any judge, or any Court, at any stage over the last five years. Conclusion 18 ASIC should pay the costs of the Cassimatises for ASIC's application for leave to amend filed on 27 May 2016 and the costs of the Cassimatises of the consequential amendments to their defence. I certify that the preceding eighteen (18) numbered paragraph are a true copy of the Reasons for Judgment herein of the Honourable Justice Edelman. Associate: Dated: 4 June 2016