FEDERAL COURT OF AUSTRALIA Australian Securities and Investments Commission, in the matter of Whitebox Trading Pty Ltd v Whitebox Trading Pty Ltd (No 2) [2017] FCA 385 File number: NSD 383 of 2016 Judge: GLEESON J Date of judgment: 13 April 2017 Catchwords: COSTS – application to vary order that costs follow the event – whether costs in an application for a ruling under s 192A of the Evidence Act 1995 (Cth) regarding a claim of privilege by the respondent should be costs in the cause – no reason to depart from the ordinary rule that costs follow the event – circumstances do not warrant variation Legislation: Evidence Act 1995 (Cth) Federal Court of Australia Act 1976 (Cth) Federal Court Rules 2011 Cases cited: Australian Competition and Consumer Commission v Allphones Retail Pty Ltd (No 3) [2009] FCA 1075; (2009) 259 ALR 541 Guess?, Inc v Guccio Gucci SpA [2016] FCA 1218 His Eminence Metropolitan Petar, Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand v The Macedonian Orthodox Community Church St Petka Inc (No 2) [2007] NSWCA 142 J & A Vaughan Super Pty Ltd (Trustee) v Becton Property Group Ltd (No 4) [2015] FCA 218 James v Commonwealth Bank of Australia (No 2) [2015] FCA 599 JT Stratford Ltd v Lindley [1969] 1 WLR 1547 Kernahan v ACN 003 134 475 Pty Ltd [2010] NSWSC 51; (2010) 77 NSWLR 452 Media Ocean Limited v Optus Mobile Pty Ltd (No 6) [2009] FCA 1319 NA & J Investments Pty Ltd v Minister Administering Water Management Act 2000 (No 4) [2012] NSWLEC 120 Public Trustee v Nash (1921) 38 WN (NSW) 142 The Council of the New South Wales Bar Association v Franklin [2014] NSWCA 329 Date of hearing: Heard on the papers Date of last submissions: 5 April 2017 (Plaintiff) 3 April 2017 (Defendant) Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 15 Counsel for the Plaintiff: IJM Ahmed Solicitor for the Plaintiff: Australian Securities and Investments Commission Counsel for the Defendants: Mr M Steele SC Solicitor for the Defendants: Thompson Eslick ORDERS NSD 383 of 2016 IN THE MATTER OF WHITEBOX TRADING PTY LTD (ACN 139 567 598) BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Plaintiff AND: WHITEBOX TRADING PTY LTD (ACN 139 567 598) First Defendant JOHANNES HENDRIK BOSHOFF Second Defendant JUDGE: GLEESON J DATE OF ORDER: 13 APRIL 2017 THE COURT ORDERS THAT: 1. The defendants' application to the Court to vary order 2 made on 30 March 2017 be refused. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT GLEESON J: 1 On 30 March 2017, I made an advance ruling in favour of the plaintiff ("ASIC"), pursuant to s 192A(b) of the Evidence Act 1995 (Cth) and an order that the defendants ("Whitebox") pay ASIC's costs of the application for the advance ruling: Australian Securities and Investments Commission, in the matter of Whitebox Trading Pty Ltd v Whitebox Trading Pty Ltd [2017] FCA 324. 2 Counsel for Whitebox, Mr Livingston, immediately sought an opportunity to make submissions in support of the proposition that the costs of the application should be costs in the cause or, alternatively, ASIC's costs in the cause. After hearing brief oral submissions, I made directions for the parties to make written submissions on the basis that I would deal with Whitebox's application to vary the costs order on the papers. Legal framework 3 Under s 43(2) of the Federal Court of Australia Act 1976 (Cth), except as provided by any other Act, the award of costs is in the discretion of the Court. 4 In relation to costs on an interlocutory application or hearing, r 40.04 of the Federal Court Rules 2011 ("Rules") provides: If no order for costs is made on an interlocutory application or hearing, the costs of the application or hearing: (a) if an order is made in favour of any party--follow the event; or (b) if no order is made in favour of any party--are taken to be costs in the cause of the successful party to the proceeding. 5 Thus, as Katzmann J said in James v Commonwealth Bank of Australia (No 2) [2015] FCA 599 at [20], the "default position" under the Rules, where an order is made in favour of a party following an interlocutory hearing, is that costs follow the event. 6 In some cases, the default position is unlikely to apply. An example is a successful application for an interlocutory injunction, where the applicant's entitlement to ultimate relief has not been adjudicated. In that case, the usual order is that the costs of the application are costs in the cause: His Eminence Metropolitan Petar, Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand v Macedonian Orthodox Community Church St Petka Inc (No 2) [2007] NSWCA 142 ("Metropolitan Petar") at [21]. Another example is a successful application for an indulgence, such as an application for leave to amend: cf. J & A Vaughan Super Pty Ltd (Trustee) v Becton Property Group Ltd (No 4) [2015] FCA 218 ("Vaughan Super") at [6]. In that case, the applicant is usually ordered to pay the costs thrown away by reason of the amendment. 7 However, the proper award of costs may be affected by the manner in which the application is conducted. For example, an unsuccessful party opposing the grant of leave may be deprived of its costs or may be ordered to pay the costs of the application for leave if that party has "unreasonably opposed" the application: Public Trustee v Nash (1921) 38 WN (NSW) 142, 142-143; Media Ocean Limited v Optus Mobile Pty Ltd (No 6) [2009] FCA 1319, [34]. Whitebox submissions 8 Whitebox submitted that the purpose and effect of the ruling sought by ASIC under s 192A of the Evidence Act was to determine whether any of the subject documents are prevented, by reason of s 118 or s 119, from being adduced in evidence at the final hearing of the proceedings. It argued that, in the particular circumstances, it is "right to make the costs of the interlocutory proceedings depend on who won or lost in the main action": cf. Metropolitan Petar at [19] citing JT Stratford Ltd v Lindley [1969] 1 WLR 1547 at 1554. Whitebox argued that this is a case in which "it can be expected that the final award of costs will reflect how the costs of the interlocutory proceeding should be awarded:" cf. Vaughan Super at [8]. Whitebox submitted that an advance ruling on the admissibility of evidence may be seen as a paradigm example of an interlocutory application the utility and object of which is so bound up with the ultimate outcome of the final hearing as to make such a costs order appropriate. This was said to be so because whether the ruling obtained by ASIC is ultimately fruitful will necessarily turn upon whether or not ASIC succeeds at the final hearing: cf. Metropolitan Petar at [25]. 9 Whitebox contended that its proposed order is consistent with other cases in which the courts have given a ruling under s 192A of the Evidence Act upon terms that the costs of the application be costs in the cause, including Kernahan v ACN 003 134 475 Pty Ltd [2010] NSWSC 51; (2010) 77 NSWLR 452 ("Kernahan") at [69], 462; NA & J Investments Pty Ltd v Minister Administering Water Management Act 2000 (No 4) [2012] NSWLEC 120 ("NA & J Investments") at [49]; The Council of the New South Wales Bar Association v Franklin [2014] NSWCA 329 ("Franklin") at [22]. ASIC's submissions 10 ASIC argued that the cases involving rulings pursuant to s 192A cited by Whitebox do not support a conclusion that an order of "costs in the cause" is the usual order in relation to such applications. None of those cases concerned an advance ruling concerning a question of privilege. Further, no reasons were given for the making of the costs orders in those cases. 11 In contrast to those authorities, ASIC referred to ACCC v Allphones Retail Pty Ltd [2009] FCA 1075; (2009) 259 ALR 541, a case in which a ruling pursuant to s 192A of the Evidence Act was made in relation to a dispute as to "without prejudice" privilege under s 131 of the Act. In that case, the Court determined (at [90]) that costs should follow the event and ordered the substantially unsuccessful party to pay the substantially successful party's costs. 12 ASIC argued that it is common for costs to follow the event in applications to resolve privilege disputes separately from, and in advance of, a final hearing. See, for example, Guess?, Inc v Guccio Gucci SpA [2016] FCA 1218 at [5]. Consideration 13 The application is not relevantly analogous to an application for an interlocutory application, because the Court has made a final determination as to claims of privilege that were made by Whitebox. Nor is it necessarily analogous to an advance ruling as to the admissibility of evidence, which was the nature of the rulings sought in Kernahan, NA & J Investments and Franklin. 14 ASIC's application was made in response to Whitebox's assertion of privilege. Whitebox was unsuccessful in maintaining its claims of privilege on the application. In my view, costs should follow the event on such an application, in the absence of circumstances warranting a departure from the default position. There are no circumstances warranting such a departure. 15 Accordingly, I decline to vary order 2 made on 30 March 2016. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson. Associate: Dated: 13 April 2017