FEDERAL COURT OF AUSTRALIA GG Australia Pty Ltd v Sphere Projects Pty Ltd (No 3) [2017] FCA 1631 File number: NSD 1115 of 2015 Judge: MARKOVIC J Date of judgment: 15 December 2017 Date of publication of reasons: 31 January 2018 Catchwords: COSTS – costs thrown away by reason of amendments to defence – where pleadings closed at time of filing amended defence – where explanation for delay inadequate – whether to make costs order on indemnity basis Legislation: Federal Court of Australia Act 1976 (Cth) s 43 Federal Court Rules 2011 (Cth) r 16.53 Cases cited: DSE (Holdings) Pty Ltd v InterTAN Inc (2004) 51 ACSR 555; [2004] FCA 1251 Silver Fox Co Pty Ltd (as trustee for the Baker Family Trust) v Lenard's Pty Ltd (No 3) (2004) 214 ALR 621; [2004] FCA 1570 Date of hearing: 15 December 2017 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Category: Catchwords Number of paragraphs: 15 Counsel for the Applicants: Mr P Afshar Solicitor for the Applicants: Spinks Eagle Lawyers Counsel for the Respondents: Mr M S White SC Solicitor for the Respondents: Johannessen Legal & Migration ORDERS NSD 1115 of 2015 BETWEEN: GG AUSTRALIA PTY LTD ACN 151 617 944 First Applicant GG TOWNSVILLE PTY LTD Second Applicant GG TUGGERANONG PTY LTD (and another named in the Schedule) Third Applicant AND: SPHERE PROJECTS PTY LTD ACN 136 601 664 First Respondent ZORAN SEVER Second Respondent JUDGE: MARKOVIC J DATE OF ORDER: 15 December 2017 THE COURT ORDERS THAT: 1. The respondents are granted leave to rely on the amended defence filed on 20 September 2017. 2. The respondents are to pay the applicants' costs thrown away by reason of the amendments, those costs to be payable on an indemnity basis from 13 May 2016. 3. The costs of the respondents' interlocutory application for leave to rely on the amended defence be costs in the cause. 4. The four notices to produce filed by the respondents on 5 October 2017 and served on the applicants are to be returnable before the Court on 19 March 2018 at 10.15 am. 5. If the applicants continue to object to the production any of the documents sought by the notices to produce then they are to file and serve written objections and submissions, not exceeding 3 pages in length, on or before 9 February 2018. 6. In the event that the applicants file objections in accordance with Order 5, the respondents are to file written submissions in response, not exceeding 3 pages in length, on or before 16 February 2018. 7. The applicants' interlocutory application filed on 25 July 2017 is stood over for further hearing to 19 March 2018 at 10.15 am. 8. Vacate Order 4 made on 2 August 2017. 9. Liberty to restore the matter to the list on 3 days' notice. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT MARKOVIC J: 1 On 24 November 2017 the respondents, Zoran Sever and Sphere Projects Pty Ltd, filed an interlocutory application seeking an order that they have leave to amend their defence pursuant to r 16.53 of the Federal Court Rules 2011 (Cth) (Rules) and to rely on their amended defence filed on 20 September 2017 (Amended Defence). 2 On 15 December 2017 I made orders, among others, granting the respondents leave to rely on the Amended Defence and requiring the respondents to pay the applicants' costs thrown away by reason of the amendments with those costs to be payable on an indemnity basis from 13 May 2016. These are my reasons for ordering that the respondents pay those costs thrown away on an indemnity basis from 13 May 2016. Background 3 On 18 September 2015 the applicants made an urgent application before start of a proceeding which resulted in orders being made that the respondents be, in effect, restrained from communicating with certain persons associated with any Gold's Gym in relation to the financial position, including the solvency, of any of the applicants or any other of the Gold's Gym entities; or in relation to the ability of the applicants or any other of the Gold's Gym entities to pay their employees or contractors. 4 On 2 October 2015 the applicants filed their originating application and statement of claim. 5 On 14 October 2015 orders were made for the respondents to file and serve any application for the removal of this proceeding to join proceedings filed in the Supreme Court of Queensland and for steps to be taken by the parties preparatory to the hearing of that application. That application was ultimately not pursued and orders were made on 8 March 2016, among other things, dismissing the application for removal of this proceeding to the Supreme Court of Queensland and requiring the respondents to file and serve their defence by 28 March 2016. 6 The time for the respondents to file their defence was extended by subsequent orders and, ultimately, the respondents filed their defence on 13 May 2016. 7 Since the filing of the defence, orders have been made for the parties to file and serve their evidence with a view to the matter being allocated a hearing date. That has not yet occurred, there having been a number of interlocutory applications in the interim. However, at least until the filing of the Amended Defence, the parties proceeded on the basis that the pleadings were closed and that the respondents relied on their defence filed on 13 May 2016. 8 On 20 September 2017 the respondents filed their Amended Defence notwithstanding that the Court had not granted leave for them to do so. Thereafter, on 24 November 2017, the respondents filed their interlocutory application seeking the orders referred to in [1] above. In support of their interlocutory application the respondents relied on an affidavit affirmed by their then solicitor, Rhondda Nicholas, in which she said, among other things: 4. The original defence in these proceedings was filed on [date]. In July 2017 I briefed Senior Counsel with expertise in defamation claims to act for the Respondents because a central aspect of the claims brought against the Respondents were claims for damages for defamation. After receiving advice from Senior Counsel, the Respondents' defence was amended and filed with the Registry in error. Attached and Marked "A" is a copy of the proposed and filed amended defence. 5. As advised I understand that the pleading of the defamation defences in the amended defence better complies with the usual requirements for pleading and particularisation of the defamation defences relied on and are in the nature of amendments required to put the Applicants on notice of those defences in appropriate detail. Other amendments were made as a result of further instructions obtained from the First Respondent in the course of preparing his affidavit evidence and to ensure that the defence is consistent with the affidavit evidence served by the Respondents. 9 The respondents have been legally represented throughout the proceeding, albeit by different solicitors. Ms Nicholas acted for the respondents in the proceeding from 9 March 2016 to 1 December 2017. Consideration 10 The respondents did not oppose the making of an order that they pay the applicants' costs thrown away by reason of the order permitting them to rely on the Amended Defence. However, they did oppose the making of an order requiring them to pay those costs on an indemnity basis. The respondents submitted that the delay in the filing of the Amended Defence and the making of the application to rely on it was not occasioned through any fault of their own. 11 Section 43 of the Federal Court of Australia Act 1976 (Cth) empowers the Court or a Judge to award costs in all proceedings before the Court other than those in respect of which that Act or any other Act provides that costs must not be awarded. The Court has a very wide discretion to award costs. In DSE (Holdings) Pty Ltd v InterTAN Inc (2004) 51 ACSR 555; [2004] FCA 1251 Allsop J, as his Honour then was, said at [14] that "[s]ection 43 of the Federal Court of Australia Act is a broad and ample power not to be read down otherwise than by judicial principle conformable with the amplitude of the power". 12 Section 43(3) provides that, without limiting the discretion of the Court or a Judge, the Court or Judge, may, among other things, order that the costs awarded against a party be assessed on an indemnity basis. Costs can be awarded on an indemnity basis where there is some justification to depart from the ordinary rule that a successful party will generally recover costs on a party and party basis: see Silver Fox Co Pty Ltd (as trustee for the Baker Family Trust) v Lenard's Pty Ltd (No 3) (2004) 214 ALR 621; [2004] FCA 1570 at [26] (per Mansfield J). It has also been recognised that the categories of case in which indemnity costs might be ordered are not closed. 13 Here, the explanation for filing the Amended Defence almost two years after commencement of the proceeding was, in my view, inadequate. That the respondents' former solicitor only briefed senior counsel with expertise in defamation claims in July 2017 may not be the fault of the respondents. However, the steps taken by their former solicitor were taken at a stage in the proceeding when pleadings had been closed for some time and the parties had been preparing the matter for hearing on the basis of the Amended Defence. The respondents have been represented throughout the proceeding and had been represented by their former solicitor for approximately 18 months at the time of the filing of the Amended Defence. They have also been represented by counsel throughout, albeit not senior counsel who appeared for them on this application. 14 Parties to litigation are required to pursue proceedings, both as applicants and respondents, with some diligence. The delay in filing the Amended Defence does not display the requisite level of diligence. Its late filing will add to the time, already unduly long, for the matter to get to hearing and finalisation. Conclusion 15 For those reasons I made the costs order on the basis set out at [2] above. 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: 31 January 2018 SCHEDULE OF PARTIES NSD 1115 of 2015 Applicants Fourth Applicant: LEIGH TAYLFORTH