FMR INVESTMENTS PTY LIMITED -v- KEOGH [2026] WASC 319

[2026] WASC 319 Page 1 JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA IN CIVIL CITATION : FMR INVESTMENTS PTY LIMITED -v- KEOGH [No 2] [2026] WASC 319 CORAM : MUSIKANTH J HEARD : ON THE PAPERS DELIVERED : 4 AUGUST 2026 PUBLISHED : 4 AUGUST 2026 FILE NO/S : CIV 1957 of 2023 BETWEEN : FMR INVESTMENTS PTY LIMITED Plaintiff AND PATRICK RHYAN KEOGH Defendant Catchwords: Costs - Where otherwise successful plaintiff failed on one issue - Whether issue discrete and severable and added to cost of proceedings in significant and readily discernable way - Whether costs award should be reduced and if so by how much - Turns on own facts Indemnity costs - Calderbank offer - Whether failure to accept offer unreasonable - Turns on own facts -- 1 of 13 -- [2026] WASC 319 Page 2 Legislation: Evidence Act 1906 (WA) s 79C Limitation Act 2005 (WA) s 38 Category: B Representation: Counsel: Plaintiff : No appearance Defendant : No appearance Solicitors: Plaintiff : Johnson Winter & Slattery - Perth Defendant : HFW Australia (Perth) Case(s) referred to in decision(s): Barjeba Pty Ltd v Bogg [2023] WASC 232 (S) FMR Investments Pty Ltd v Keogh [2026] WASC 138 Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1 Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435 Keogh v Bartlett [2026] WASC 166 Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534 McIntosh v Peterson [No 3] [2024] WASC 446 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 Sakari Resources Ltd v Purvis [2016] WASCA 24 (S) State of New South Wales v UXC Ltd (No 2) [2011] NSWSC 685 Strezelecki Holdings Pty Ltd v Jorgensen [2019] 54 WAR 388; [2019] WASCA 96 The Returned & Services League of Australia WA Branch Incorporated v Vietnam Veterans and Veterans Motorcycle Club WA Branch Inc [No 2] [2025] WASC 148 -- 2 of 13 -- [2026] WASC 319 MUSIKANTH J Page 3 MUSIKANTH J: 1 On 20 April 2026, I delivered judgment in these proceedings.1 2 Following conferral, the parties agreed on the final form of orders required to give effect to my findings. 3 However, the parties disagree on two matters relating to costs: (1) What proportion of FMR's costs Mr Keogh should be ordered to pay in circumstances where FMR was both unsuccessful with respect to one issue, namely Issue 6, and had also abandoned an application to extend time under s 38 of the Limitation Act 2005 (WA) shortly before trial (Limitation Act application).2 (2) Whether any part of FMR's costs should be paid on an indemnity basis in circumstances where Mr Keogh failed to accept any one of three Calderbank offers made by FMR. 4 FMR properly accepts that Mr Keogh should have his costs of the abandoned Limitation Act application. However, according to FMR, Mr Keogh should otherwise pay all of its costs of the action, with such costs to be paid on an indemnity basis from a particular date. 5 Mr Keogh, on the other hand, submits that FMR should only be permitted to recover 70% of its taxed or agreed costs, and all costs payable should be on a party-party basis. 6 For the reasons which follow, there will be orders to the effect that: (1) FMR pay Mr Keogh's costs of FMR's application, by chamber summons dated 15 October 2024, to extend time under s 38 of the Limitation Act 2005 (WA). (2) Mr Keogh pay 90% of FMR's costs of the action, including any reserved costs (other than those referred to in (1) above), to be taxed if not agreed. (3) Mr Keogh pay such costs on an indemnity basis on and from 22 May 2024. 1 FMR Investments Pty Ltd v Keogh [2026] WASC 138. Save where the context otherwise indicates, shorthand expressions deployed in these supplementary reasons bear the same meaning as in my earlier reasons. 2 FMR Investments Pty Ltd v Keogh [26], [27(1)]. -- 3 of 13 -- [2026] WASC 319 MUSIKANTH J Page 4 Proportion of costs payable 7 It is well-established that the court has a wide discretion as to costs, which is to be exercised judicially but is otherwise unconfined.3 The discretion is ultimately to be exercised to achieve what is fair and just between the parties according to the circumstances of the particular case.4 8 Generally, the starting point is that the court will order that the successful party recover their costs; that is, costs follow the event.5 It is incumbent on the unsuccessful party to satisfy the court that there are good reasons why it should not pay the costs of the successful party.6 9 What constitutes 'success' is to be determined by the reality of the circumstances involved in the case.7 10 One of the circumstances in which the court may depart from the general rule that costs follow the event is where the generally successful party has failed on one or more issues. 11 However:8 (1) An order that a generally successful party recover only a portion of its costs should not be made as a matter of course. (2) Rather, the power to order such an apportionment should only be exercised where there are discrete and severable issues on which the generally successful party failed, and which added to the cost of the proceedings in a significant and readily discernible way. (3) Where the court decides to exercise its discretion in this way, the power will be exercised broadly, and as a matter of impression, and without any attempt at mathematical precision; recognising it may be difficult to separate the factual and evidentiary substratum of different issues, and that some issues 3 Supreme Court Act 1935 (WA) s 37; Rules of the Supreme Court 1971 (WA), O 66 r 1; The Returned & Services League of Australia WA Branch Incorporated v Vietnam Veterans and Veterans Motorcycle Club WA Branch Inc [No 2] [2025] WASC 148 [11] referring to McIntosh v Peterson [No 3] [2024] WASC 446 [14] - [16]. 4 Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534, 558. 5 Rules of the Supreme Court 1971 (WA), O 66 r 1. 6 Barjeba Pty Ltd v Bogg [2023] WASC 232 (S) [9]. 7 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72; Strezelecki Holdings Pty Ltd v Jorgensen [2019] 54 WAR 388; [2019] WASCA 96 [50]. 8 Strzelecki Holdings Pty Ltd v Jorgensen [51] - [52]. -- 4 of 13 -- [2026] WASC 319 MUSIKANTH J Page 5 are more important than (and some are subsidiary to) other issues. 12 Against those principles, FMR submits Issue 6 was not a discrete or severable issue for costs purposes. Instead, according to FMR, it was a minor and subsidiary quantum issue arising out of the same factual matrix concerning the Aqua Alluvial campaign which underpinned FMR's successful claims against Mr Keogh, and which did not require additional witnesses, cross-examination, or expert evidence. 13 Further, according to FMR, Issue 6 has not been shown to have added to the costs of the proceeding in any significant or readily discernible way. 14 FMR submits that the abandoned Limitation Act application should not lead to any reduction in its recoverable costs of the action. It says the application was not pressed and took up no hearing time. 15 Further, although affidavit evidence from Mr Watson and Ms Romero was filed for the purposes of the Limitation Act application, FMR says this evidence substantially overlapped with the evidence those witnesses gave at trial about when, and how, FMR came to know of its claims against Mr Keogh in respect of the Pekeri management fees. The latter evidence was relevant to the construction and operation of the Deed of Release, being matters on which FMR succeeded (Issue 3 and an aspect of Issue 4). 16 On the other hand, Mr Keogh contends FMR was not wholly successful for the two reasons identified in paragraph 3(1) above. 17 Regarding the first reason, FMR by the Limitation Act application sought an extension of time so it could recover more than 50% of the amount initially claimed in connection with Issue 1; $156,200 of the $288,200 claimed in respect of the first three of Clintsoldmate's five 'project management' invoices to Pekeri. 18 Mr Keogh says FMR abandoned the Limitation Act application shortly before trial, after filing evidence and opening submissions directed to it. Although the application did not require additional witnesses, he says the supporting affidavits dealt with events after the causes of action accrued, which were not otherwise relevant to the issues in dispute. On this basis, Mr Keogh submits the application was a discrete part of the proceeding, with a factual and evidentiary -- 5 of 13 -- [2026] WASC 319 MUSIKANTH J Page 6 substratum which was not substantially common to the balance of the action. 19 As for the second reason, FMR's failure on Issue 6, Mr Keogh contends the evidence which FMR relied upon was not relevant to the other issues on which FMR succeeded. Issue 6 was, furthermore, treated both by the parties and by the court as a discrete topic. 20 Mr Keogh also disputes FMR's characterisation of the issue as not involving additional witnesses or cross-examination. According to Mr Keogh, Ms Dombroski's evidence was relevant only to Issue 6, as was the hearsay evidence of the late Mr Burns introduced pursuant to s 79C of the Evidence Act 1906 (WA). Disposition: proportion of costs payable 21 In my view, Issue 6 was a discrete and severable issue for the reasons articulated by Mr Keogh. It concerned a distinct category of alleged payments which warranted (and received) separate attention in the evidence, submissions and reasons. 22 I am also satisfied that FMR's pursuit of this issue contributed to the cost of the proceedings in a readily discernible and not insignificant way. Issue 6 was not merely incidental to FMR's success on Issue 2, or to FMR's entitlement to a compensation order for the $590,411 which Mr Keogh received in connection with the use of the Stockpile in the Aqua Alluvial campaign. It raised a separate factual question: whether FMR had proved that a further $290,000 from the proceeds of the campaign had been paid to Mr Burns. That question required FMR to adduce and analyse evidence directed to it, and to make separate submissions about whether those alleged payments were an additional recoverable component of its loss. FMR's pursuit of Issue 6 therefore generated identifiable work that would not otherwise have been necessary. 23 Having said that, I infer that the additional costs attributable to Issue 6 would have been modest when compared with the other issues on which FMR succeeded. I draw this inference noting the limited amount of attention which was devoted to Issue 6 (both at trial and in written submissions) when compared with the overwhelmingly greater amount of attention (and time) which was devoted to the other issues in the proceeding. -- 6 of 13 -- [2026] WASC 319 MUSIKANTH J Page 7 24 Taking a broad, impressionistic approach, I consider that a reduction of 10% appropriately reflects the additional costs occasioned by FMR's failure on Issue 6. 25 I do not accept that the abandoned Limitation Act application justifies any broader reduction in FMR's recoverable costs. As noted, FMR properly accepts that Mr Keogh should have his costs of that application. Those costs were reserved by orders made on 19 August 2025 and should now be the subject of a separate order. However, the application was not pressed at trial. 26 For the reasons recorded in paragraphs 14 and 15 above, I do not consider FMR's pursuit of the Limitation Act application otherwise increased the costs of the action in a way which would warrant any further discount. Indemnity costs and Calderbank offers 27 Recently, I summarised the principles relevant to an award of indemnity costs in consequence of an unsuccessful party's unreasonable failure to accept a Calderbank offer.9 28 The principles may be stated shortly. 29 The party who makes a Calderbank offer that is rejected bears the onus of satisfying the Court that it should make an award of indemnity costs in their favour.10 30 The mere fact that the recipient of a Calderbank offer is ultimately worse off than they would have been had the offer been accepted does not mean that its rejection was unreasonable.11 31 Instead, in determining whether the rejection of the offer was unreasonable all relevant facts and circumstances must be considered.12 32 Ordinarily, regard should be had to, at least, the following: (1) The stage of the proceeding at which an offer was received. 9 The Returned & Services League of Australia WA Branch Incorporated v Vietnam Veterans and Veterans Motorcycle Club WA Chapter (Inc) [No 2] [2025] WASC 148. 10 Strzelecki Holdings Pty Ltd v Jorgensen [82] citing Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1 [21]. 11 Strzelecki Holdings Pty Ltd v Jorgensen [83] citing Ford Motor Company of Australia Ltd v Lo Presti [18] and Sakari Resources Ltd v Purvis [2016] WASCA 24 (S) [13]. 12 Strzelecki Holdings Pty Ltd v Jorgensen [83] citing Ford Motor Company of Australia Ltd v Lo Presti [17]. -- 7 of 13 -- [2026] WASC 319 MUSIKANTH J Page 8 (2) The time allowed to the party to consider an offer. (3) The extent of the compromise offered. (4) The party's prospects of success assessed at the date of an offer. (5) The clarity with which the terms of an offer were expressed. (6) Whether an offer foreshadowed an application for indemnity costs in the event of the party rejecting it.13 33 FMR relies on three Calderbank offers made to Mr Keogh: the first on 8 May 2024 (2024 offer), the second on 19 August 2025, and the third on 22 August 2025. 34 The 2024 offer was conveyed by letter sent by FMR's solicitors to Mr Keogh's solicitors two days after the parties had attended an unsuccessful mediation conference before a registrar of this court. 35 The offer was expressed to be open for a period of 14 days. 36 FMR received no response from Mr Keogh to the offer. 37 By the offer, FMR offered to settle the proceedings on the terms set out in a draft deed of release attached to FMR's solicitors' letter. 38 In substance, the offer was to settle all claims the subject of these proceedings in return for a payment by Mr Keogh in the amount of $590,411, being the amount which FMR alleged Mr Keogh received from Aqua Alluvial in connection with the Aqua Alluvial Campaign (and which Mr Keogh admitted receiving). 39 The draft deed of release attached to the offer contemplated that: (1) This amount would be in full and final settlement not only of the claims then made in these proceedings but also of all other claims which either party then had, at any time had, or but for the deed might in the future have arising out of or in connection with the proceedings. (2) Within seven days of the settlement amount being paid, the parties would sign and cause to be filed a memorandum of 13 Ford Motor Company of Australia Ltd v Lo Presti [19] citing Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435 [23], [89], Sakari Resources Ltd v Purvis [12], Strzelecki Holdings Pty Ltd v Jorgensen [83]. -- 8 of 13 -- [2026] WASC 319 MUSIKANTH J Page 9 proposed consent orders seeing dismissal of the proceedings with no order as to costs. 40 In their letter conveying the offer, FMR's solicitors relevantly advanced propositions to the following effect as to the merits of FMR's claim (as it then stood) and the reasonableness of the offer. 41 First, FMR's claim had strong prospects because the Stockpile was said to have been processed as part of the Aqua Alluvial campaign at Mr Keogh's direction, and without FMR's knowledge, permission or approval. 42 Secondly, there was no credible prospect that Mr Keogh would establish the alleged late-2012 conversation with Mr Bartlett (in which the stockpile authorisation was allegedly given) in circumstances where there was no contemporaneous document recording or supporting its occurrence and where Mr Bartlett always 'strenuously' denied such a conversation had occurred. 43 Thirdly, the Deed did not bar the claim because FMR had no knowledge of the alleged misappropriation or conversion of the Stockpile when it was executed; on FMR's case, those matters only came to light after contact from the Gold Stealing Detection Unit. 44 Fourthly, a (then) foreshadowed rejoinder by Mr Keogh to incorporate an allegation of an improper tax scheme would lack any proper foundation, and would in any event go 'nowhere' if Mr Keogh did not prove the alleged stockpile authorisation.14 45 Fifthly, if the proceeding went to trial, FMR would recover more than the amount offered by the 2024 offer because FMR's primary claim was for the value of the Stockpile, together with interest and costs. 46 Sixthly, the offer represented a significant compromise on FMR's part because it required payment only of the $590,411 which Mr Keogh admitted receiving from Aqua Alluvial, while FMR would forego pursuing him for the 'full value' of the Stockpile as well as for any award of interest and reimbursement of its legal costs. 14 Less than a month after the 2024 offer was made, a rejoinder was filed incorporating an allegation to this effect. However, the allegation was effectively abandoned on the third day of trial when leave was granted to Mr Keogh to file an amended rejoinder by which, relevantly, the allegation was withdrawn. -- 9 of 13 -- [2026] WASC 319 MUSIKANTH J Page 10 47 FMR submits that Mr Keogh's failure to accept the 2024 offer was unreasonable, contending it was a genuine offer to compromise because, although it required payment of the principal amount of the Aqua Alluvial loss, it involved FMR foregoing interest and costs. 48 FMR also contends the offer was reasonable because it was clear, provided a reasonable 14-day period for acceptance, that the offer foreshadowed an application for indemnity costs, and because there would have been a commercial advantage to Mr Keogh in resolving the proceeding before further claims were introduced, interest accrued and further costs were incurred. 49 Mr Keogh, on the other hand, contends that the 2024 offer does not warrant indemnity costs. He says it was not a genuine offer to compromise because it required payment of 100% of the loss then claimed by FMR and involved only a waiver of interest and costs. 50 He also submits that it was not unreasonable for him to 'refuse to capitulate' at that stage of the proceedings, particularly in circumstances where FMR had then threatened to commence further proceedings against him, having regard to the stage of the proceedings, the state of discovery and evidence, and his assessment of his prospects of success at the time. 51 Moreover, Mr Keogh relies on the contempt proceedings which arose from the disclosure of communications from a court-ordered mediation in this matter. In the contempt proceedings,15 FMR and Mr Bartlett were found to have contravened the confidentiality attaching to the mediation by disclosing settlement negotiations in an attempt to persuade the Director of Public Prosecutions to proceed with a prosecution of Mr Keogh. FMR and Mr Bartlett were each fined $50,000 and ordered to pay Mr Keogh's costs of the contempt proceeding. 52 Against this background, Mr Keogh submits that, although the costs of the contempt proceedings themselves were dealt with by separate orders, the misconduct remains relevant to the exercise of the costs discretion in this proceeding. In particular, Mr Keogh contends it would be contrary to the interests of justice to require him to pay FMR's costs on an indemnity basis given FMR engaged in conduct which amounted to a serious abrogation of the confidentiality attaching 15 Keogh v Bartlett [2026] WASC 166 (Cobby J). -- 10 of 13 -- [2026] WASC 319 MUSIKANTH J Page 11 to a mediation conducted under the auspices of the court in the context of this matter. 53 Mr Keogh also submits that any overall costs awarded in FMR's favour should be reduced to avoid any risk of it being indemnified in respect of costs connected with its contempt. This is because, according to Mr Keogh, there is no satisfactory way to identify, and exclude, any costs incurred by FMR incidentally or ancillary to this misconduct. Disposition: indemnity costs 54 In my view, Mr Keogh's failure to accept the 2024 offer was unreasonable for at least the following reasons. 55 First, the offer was made some seven-to-eight months after FMR commenced these proceedings. By that point, pleadings had (initially) closed, and the parties had provided at least one round of discovery. 56 Secondly, by the offer Mr Keogh was afforded a period of 14 days within which to accept. This was in circumstances where the parties had shortly before attended a court-ordered mediation at which the offer had been verbally conveyed. I accordingly consider a period of 14 days to have been more than reasonable. 57 Thirdly, the proposed compromise was that Mr Keogh pay FMR only the sum which he had, by that point, himself admitted he had received from Aqua Alluvial in connection with the Aqua Alluvial campaign. No interest was sought in addition to that sum despite more than five years having passed since Mr Keogh received that money. Nor were any legal costs sought by FMR on top of that sum; despite the litigation itself having been on foot for over seven months, FMR having engaged both senior and junior counsel, and a national Australian law firm, and the proceedings having already reached beyond the stages of both discovery and mediation. 58 For at least these reasons, it is difficult to see how the 2024 offer might be characterised as anything other than a genuine offer to compromise.16 59 Fourthly, as at the date of the offer the gravamen of Mr Keogh's answer to FMR's claim (then limited to Mr Keogh's activities relating to 16 Cf. State of New South Wales v UXC Ltd (No 2) [2011] NSWSC 685. -- 11 of 13 -- [2026] WASC 319 MUSIKANTH J Page 12 the Stockpile) was that Mr Bartlett had given the stockpile authorisation,17 and the Deed in any event operated as a full release.18 60 Both of these points were rejected at trial. As to the first, Mr Keogh's version about the alleged stockpile authorisation was found to be both implausible and a fabrication.19 Accordingly, Mr Keogh, in my view, ought to have known when he came to consider the 2024 offer that the version of events he would give relating to the alleged stockpile authorisation was untrue. 61 Regarding the Deed, Mr Keogh had, by the time of the 2024 offer, effectively admitted that he had not disclosed any of the circumstances associated with the Aqua Alluvial agreement, or the distribution of payments (including to himself) following the Aqua Alluvial campaign, to FMR.20 62 In the circumstances, it is in my view difficult to see how it might have been considered reasonable for Mr Keogh to have not accepted (if not embraced) the 2024 offer. Mr Keogh in any event adduced no evidence as to why he did not do so. 63 Fifthly, the terms of the offer were crystal clear. 64 Sixthly, the offer foreshadowed an application for indemnity costs in the event Mr Keogh rejected it. 65 I do not consider matters are taken any further by the fact that FMR's statement of claim did not yet incorporate a claim relating to the Pekeri management fees at the time the offer was made. 66 As FMR correctly notes, the letter conveying the offer in any event referred to two earlier letters, dated 27 January 2022 and 3 May 2022 which had set out FMR's position on the Pekeri management fees issue, its proposed claims against Mr Keogh, a demand for payment, and an indication that proceedings might be commenced against Mr Keogh to recover amounts said to have been received by him from Pekeri. 17 At this point, allegedly ‘in or around late 2012’: Mr Keogh’s amended defence filed 23 November 2023 [12(c)]. 18 See, in particular, Mr Keogh’s amended defence filed 23 November 2023 [12(c) - (e)] and [23] - [27]. 19 Albeit in the context of a revised date having since been asserted with respect to this alleged authorisation: FMR Investments Pty Ltd v Keogh [155]. 20 See Mr Keogh’s amended defence filed 23 November 2023 [19(a)]. -- 12 of 13 -- [2026] WASC 319 MUSIKANTH J Page 13 67 Nor do I consider the contempt findings to provide a principled basis for refusing indemnity costs. Costs orders are compensatory, not punitive. Although the contempt was serious, it has already been addressed by separate orders. It does not, without more, justify denying FMR the costs consequences of Mr Keogh's unreasonable failure to accept the 2024 offer. 68 Mr Keogh has in any event not shown that the contempt lengthened the trial, required the determination of any additional issue in this matter, or generated any identifiable part of FMR's costs now claimed. Nor has he adduced any evidence to the effect that the costs of the litigation were caused or increased by the contempt. 69 In the final analysis, what matters is whether Mr Keogh acted unreasonably in not accepting the 2024 offer. For above reasons, I consider that he did. 70 Given this finding, it is unnecessary to consider whether it was also unreasonable for him not to have accepted either of the two Calderbank offers which were made in 2025. Orders 71 For the above reasons, Mr Keogh will be ordered to pay 90% of FMR's costs of the action (subject to his right to recover his costs of FMR's abandoned Limitation Act application). 72 Mr Keogh is to pay such costs on an indemnity basis on and from 22 May 2024, being both the date upon which the 2024 offer lapsed and the date from which such costs are sought by FMR in its minute of proposed final orders. I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia. IL Associate to the Hon Justice Musikanth 4 AUGUST 2026 -- 13 of 13 --