Background
Stelamar LLC and Issuer Solutions LLC brought an originating process against Soar.Earth Limited, then subject to a deed of company arrangement, its administrators, directors and a subsidiary. The Federal Court dismissed the originating process on 4 September 2026 in Stelamar LLC v Soar.Earth Limited (Subject to Deed of Company Arrangement) (No 2) [2026] FCA 1318, and set a timetable to determine costs.
Only the administrators actively participated at the substantive hearing, and their costs dispute with the plaintiffs was resolved by agreement. The first defendant, the third to fifth defendants, and the sixth defendant had filed a notice submitting to the Court’s jurisdiction save as to costs about six weeks after the proceeding commenced. They sought costs as a lump sum; the plaintiffs opposed any costs order in their favour.
The Court’s Holding
Justice Jackman ordered the plaintiffs jointly and severally to pay the submitting defendants $23,187.62 in lump-sum costs. A submitting notice does not itself establish that costs should be denied after its filing; the issue remains one for the Court’s broad discretion under s 43 of the Federal Court of Australia Act 1976 (Cth), assessed on all the circumstances.
The submitting defendants had a real interest in the outcome because they included the company, its directors who proposed the deed of company arrangement, and a subsidiary. It was reasonable for them to obtain legal advice before deciding to submit, then incur modest costs monitoring the case and seeking costs. Their conduct had not materially increased the plaintiffs’ costs. Because the plaintiffs failed in the originating process, the Court held that they should pay those defendants’ costs.
The Court accepted affidavit evidence supporting the amount claimed, including a 40% discount on Australian solicitors’ fees and a 50% discount on the first defendant’s New York legal fees. The plaintiffs advanced no alternative amount if their opposition to costs failed.
Key Takeaways
- A notice submitting save as to costs does not create a presumption against a costs award after the notice is filed.
- Defendants with a genuine stake in proceedings may reasonably incur costs for advice before electing to submit.
- Supported and substantially discounted costs may appropriately be awarded as a lump sum.
Why It Matters
The decision confirms that a defendant can recover reasonable costs despite choosing not to contest the merits, where its early legal work was justified and it did not unnecessarily add to the claimant’s costs. It also illustrates the Federal Court’s willingness to resolve costs efficiently through a discounted lump-sum order where the evidence permits a practical assessment.