Australian Securities and Investments Commission v Jorgensen & Ors [2008] QSC 112

SUPREME COURT OF QUEENSLAND CITATION: ASIC v Jorgensen & Ors [2008] QSC 112 PARTIES: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION (applicant) v ALAN BRADLEY JORGENSEN (first respondent) ROBERT WILLIAM MORTON AS TRUSTEE OF THE BANKRUPT ESTATE OF ALAN BRADLEY JORGENSEN (second respondent) JIM’S WATER TANKS PTY LTD (ACN 123 918 721) (third respondent) ZHI LI also known as LINYA JORGENSEN (fourth respondent) FILE NO: BS7032 OF 2007 DIVISION: Trial Division PROCEEDING: Costs order on the papers ORIGINATING COURT: Supreme Court, Brisbane DELIVERED ON: 3 June 2008 DELIVERED AT: Supreme Court, Brisbane HEARING DATE: 29 January 2008 – 1 February 2008; 15, 19, 22 May 2008 JUDGE: Douglas J ORDER: That the applicant pay the first respondent’s costs of and incidental to the application, including reserved costs if any, assessed on the standard basis. CATCHWORDS: PROCEDURE – COSTS – DEPARTING FROM THE GENERAL RULE – ORDER FOR COSTS ON AN INDEMNITY BASIS – where the applicant had legitimate concerns in bringing an application for contempt of court – where the application failed on the basis technical rules – whether the respondent is entitled to costs on an indemnity basis. Uniform Civil Procedure Rules 1999, r681, 703 -- 1 of 3 -- 2 Oshlack v Richmond River Council (1998) 193 CLR 72 Rosniak v Government Insurance Office (1997) 41 NSWLR 608 Smits v Tabone [2007] QCA 337 Todrell Pty Ltd v Finch [2007] QSC 386 COUNSEL: J W Peden for the applicant L F Kelly SC with D J Pyle for the respondents SOLICITORS: ASIC for the applicant Lillas & Loel Lawyers for the respondent [1] Douglas J: I dismissed this application for reasons delivered on 15 May 2008. The parties have provided written submissions in respect of costs and did not wish to be heard further orally. [2] The respondent, Mr Jorgensen, submits that he is entitled to costs on an indemnity basis for the reason that the applicant pursued a case that was hopeless on a number of grounds. He makes the submission that the applicant failed on the basis of well known technical rules and not just on a single technical ground. In reliance on the decision of Chesterman J in Todrell Pty Ltd v Finch [2007] QSC 386 at [4] he argued that it was not necessary for him to establish ethical or moral delinquency by the applicant but that it was enough that the applicant conducted itself unreasonably in some way. The test his Honour adopted in that decision was: “whether there was something irresponsible about the conduct of the losing party which exposed its opponent to costs which should, in fairness, be ordered on the indemnity basis. It is, of course, irresponsible to commence proceedings which cannot succeed because of a known legal impediment.” [3] The applicant resists the order for indemnity costs and argues that no order as to costs should be made. It does so on the basis that it has not been shown that its bringing of the application falls within the categories of cases in which it would be appropriate to make an order for indemnity costs. In that context it also argues that it has not been shown that it conducted itself unreasonably or irresponsibly, relying on decisions of this Court and the New South Wales Court of Appeal in Smits v Tabone [2007] QCA 337 at [44]-[46] and Rosniak v Government Insurance Office (1997) 41 NSWLR 608, 616. [4] It seems to me that the conduct of Mr Jorgensen gave rise to legitimate concern in the applicant that his conduct was in breach of the orders made against him even if it failed, for a number of reasons, some of which may be described as technical, to establish that he was in contempt of court. Technicality is, however, a feature of the defence of applications to commit for contempt of court. [5] One of the applicant’s principal arguments for seeking to avoid a costs order against it was that it was pursuing a public interest in bringing the application and in that context reference was made to a statement by Kirby J in Oshlack v Richmond River Council (1998) 193 CLR 72, 122 that “a rigid application of the compensatory principle in costs orders would be completely impermissible” where issues of public interest arose. -- 2 of 3 -- 3 [6] The legitimate concerns that the applicant had in bringing the application lead me to the conclusion that its behaviour was not initially unreasonable or irresponsible even if it was technically deficient. In those circumstances it does not seem to me to be appropriate to order that the respondent recover indemnity costs. It does seem to me, however, that the number of problems associated with the bringing of the application was such as to justify an order for costs. [7] The criticism might be made that the respondent could have pointed out these difficulties at an earlier stage but that is not his role in litigation of this nature. It is important that an applicant in proceedings for contempt of Court approaches their prosecution rigorously in formulating the charge of contempt, particularising it clearly and in supporting it by relevant, admissible evidence. In those circumstances it seems to me appropriate to order that the applicant pay the first respondent’s costs of and incidental to the application, including reserved costs if any, assessed on the standard basis and I make such an order. -- 3 of 3 --