Australian Securities and Investments Commission v iSignthis Limited (Costs)

This judgment came at the end of a substantial Federal Court proceeding brought by ASIC. By the time the court reached this stage, the main contest had already been decided. In June 2024, McEvoy J had delivered a liability judgment finding that iSignthis, now Southern Cross Payments Ltd, had contravened ss 104H and 674(2) of the Corporations Act 2001 (Cth). The court also found that the company's former chief executive officer and managing director, Mr Nickolas John Karantzis, had contravened ss 180(1), 1309(2), 1309(12) and 674(2A) by reason of his involvement in the company's contraventions of s 674(2).

The matter then moved to penalty. In August 2025, the court ordered the company to pay a $10 million pecuniary penalty and Mr Karantzis to pay a $1 million pecuniary penalty. Mr Karantzis was also disqualified from managing corporations for six years. Those were serious outcomes. But even after liability and penalty are decided, a major commercial question often remains: who pays the legal costs of the proceeding?

That was the issue in this judgment. ASIC said the ordinary rule should apply because it had been substantially successful overall. The defendants did not argue that ASIC should recover nothing. Instead, they accepted that some costs should be paid but said ASIC should not get all of them. Their position was that ASIC had failed on a number of issues during the liability case and had not obtained all the penalty orders it sought, so the costs order should be reduced or apportioned.

The court therefore had to decide whether this was one of the unusual cases where a successful party should be deprived of part of its costs because it lost on some issues along the way. It also had to decide a separate costs question about an interlocutory application concerning two without prejudice letters, and whether ASIC's costs should be fixed as a lump sum or assessed by taxation if the parties could not agree the amount.

ASIC's position was straightforward. It said it had been substantially successful at both the liability and penalty stages, so the defendants should pay its costs of and incidental to the proceeding. ASIC also asked for those costs to be assessed on a lump sum basis under the Federal Court Rules.

The defendants took a narrower but still important position. They accepted that they should pay a portion of ASIC's costs, but argued that the court should apportion costs by reference to the issues on which ASIC succeeded and the issues on which ASIC failed. They said there were separate and discrete issues in the liability trial and that ASIC had not succeeded in relation to several of them.

The issues identified by the defendants included the Performance Shares case, which involved allegations of breaches of ss 181 and 182 of the Corporations Act by Mr Karantzis, aspects of the One-off Revenue Representation case, alleged non-disclosure of Visa information for the period before 12 May 2020, and the responses given to the ASX in response to a query letter. The defendants argued that these matters had involved substantial evidence and submissions and should therefore affect the costs outcome.

The defendants also argued that ASIC had not obtained all the penalty orders it sought. They said the court had imposed lower pecuniary penalties and a shorter disqualification period than ASIC had asked for, and that this should reduce ASIC's recoverable costs for the penalty stage.

On the numbers, the defendants proposed significant reductions. They contended that the portion of ASIC's costs to be paid by the company should be reduced by 15 per cent and the portion to be paid by Mr Karantzis should be reduced by 81 per cent. They also argued that the costs burden should be split unequally between them because some allegations, including the Performance Shares and ASX Answers cases, had been advanced only against Mr Karantzis. Overall, they maintained that ASIC should recover only about 40 per cent of its costs of the liability trial.

There was also a separate dispute about an interlocutory application brought during the penalty phase. The defendants had sought orders allowing them to adduce two without prejudice letters under an exception in the Evidence Act 1995 (Cth). That application had been heard by Moshinsky J, who made orders substantially in the form sought by the defendants, with costs reserved. The defendants said costs of that application should follow the event and ASIC should pay them. ASIC said either it should recover its own costs of the application, because the letters did not materially assist on penalty, or there should be no order as to costs.

The legal issue was not whether the defendants had contravened the Corporations Act. That had already been decided. The issue here was how the Federal Court should exercise its discretion on costs under s 43(2) of the Federal Court of Australia Act 1976 (Cth), and whether there was any proper basis to depart from the ordinary rule that costs follow the event.

The court set out a series of established principles. First, a successful litigant will ordinarily receive its costs unless there are special or exceptional circumstances justifying a different order. Secondly, where a party succeeds overall but fails on some issues, the court may in some cases deprive that party of costs on those issues, or even order it to pay the other side's costs of them. But that is not the starting point. The court emphasised that issue-based apportionment is an exceptional measure.

The judgment drew on established Federal Court authority saying that a court should be reluctant to dissect a case issue by issue. A successful party should not be deprived of costs merely because it failed on some points unless those points were quite separate and distinct from the issues on which it succeeded, or unless there was some element of unreasonableness or inappropriate conduct in running them.

The court also identified practical factors relevant to whether issue-based apportionment is appropriate. These include the relative strength of the lost issue, whether it greatly increased the length of the proceeding, whether it was significant in proportion to the whole case, whether the evidence on that issue overlapped with evidence on successful issues, and whether it was reasonable to agitate the issue in any event.

Another important point was that courts should not place undue emphasis on whether a successful party lost on particular issues when it was predominantly successful in the controversy overall. If allocating costs issue by issue would be difficult, artificial or impossible because the evidence and work overlap, the court will be reluctant to do it. The object of any apportionment is not mathematical precision but a result that reflects the interests of justice in the overall circumstances.

The court held that there was no reason to depart from the ordinary position that costs follow the event. ASIC had been substantially successful at both liability and penalty, and the defendants had not shown the exceptional circumstances needed to justify issue-based apportionment. Subject to one exception, the defendants were ordered to pay ASIC's costs of and incidental to the proceeding.

The court rejected the defendants' attempt to reduce costs by reference to the issues on which ASIC had not succeeded. On the Performance Shares case, the court accepted ASIC's submission that although those allegations did not meet the Briginshaw standard, they had been found to be evenly balanced in the liability judgment. More importantly for costs, the court found that the evidence and issues raised by that part of ASIC's case were not clearly severable and distinct from the rest of the case. They overlapped significantly with other parts of ASIC's case, including the One-off Revenue Representation and non-disclosure allegations. The court also accepted that it was not unreasonable for ASIC, as regulator, to run that case.

The court also rejected apportionment based on the other unsuccessful aspects of ASIC's case. In relation to the earlier period of alleged non-disclosure of Visa information, the court said that even if ASIC had only alleged contraventions from 12 May 2020 onward, it would still have been necessary to draw the court's attention to documents and evidence from the earlier period. Similar reasoning applied to the ASX answers issue. The court considered that trying to apportion costs for those matters would involve a nit-picking exercise that would obscure and ignore the ultimate result.

On penalty, the court rejected the argument that ASIC's costs should be reduced because the court imposed lower penalties and a shorter disqualification period than ASIC had sought. The court described that submission as untenable in the circumstances. It accepted ASIC's point that most of the evidence and submissions at the penalty stage concerned whether any disqualification order should be made at all. The defendants had argued that no disqualification order was justified, so ASIC was plainly required to address the court on all issues relevant to disqualification. The court found that the complexity and length of the penalty stage would not have differed in any material respect if ASIC had sought a lesser period of disqualification.

The one exception concerned the defendants' interlocutory application about the two without prejudice letters. The court made no order as to costs for that application. It accepted that the letters did not materially assist the defendants on penalty and therefore they should not get their costs of the application. But because the defendants had substantial success on the application itself, it was also not appropriate to order them to pay ASIC's costs of it.

Finally, the court refused ASIC's request for a lump sum costs order. Applying the principles relevant to lump sum costs, the court was not satisfied that ASIC had shown such an order would be appropriate. It therefore ordered that ASIC's costs be taxed in the usual manner if the parties could not agree the amount.

The practical lesson is wider than continuous disclosure litigation. This judgment applies familiar Federal Court costs principles that can affect many kinds of disputes, including regulatory proceedings, misleading conduct claims, competition matters, shareholder litigation and other complex commercial cases. If the other side wins the controversy overall, you should not assume that your success on some sub-issues will produce a meaningful reduction in the costs order.

The court's reasoning is especially important where the facts and evidence overlap across multiple allegations. Businesses often defend proceedings by breaking the case into separate points and counting wins and losses issue by issue. That can be a useful advocacy tool, but it does not necessarily translate into a better costs outcome. If the evidence would have been led anyway, or if the unsuccessful issues are intertwined with the successful ones, the court may refuse to carve the case up.

This matters commercially because costs can be a major second-order liability. A business may focus on the headline exposure, such as damages, penalties, injunctions or disqualification orders, and underestimate the significance of legal costs. But in a long-running Federal Court matter, costs can be substantial. This judgment shows that even where a defendant narrows some allegations or persuades the court not to grant every order sought by the regulator, that may not materially reduce the costs burden if the regulator still succeeds overall.

For directors and senior managers, the case also reinforces the value of strong internal processes around public statements, market disclosures, exchange responses and governance decisions. The court's refusal to apportion costs was influenced by the overlap between different parts of the case. In practical terms, weak processes can create a web of related factual issues that become expensive to defend together. Once that happens, it may be difficult later to argue that some parts were separate enough to justify a lower costs order.

It is also worth noting what the case does not say. It does not mean a successful party always gets every dollar of its costs, or that issue-based apportionment is impossible. The court accepted that apportionment can be appropriate in some cases. But it treated that as exceptional and looked for genuinely separate issues or some unreasonable conduct in running them. Businesses involved in litigation should therefore assess costs risk early and realistically, rather than assuming partial wins will automatically soften the outcome.

Although this case arose from an ASIC proceeding, the operational message for businesses is broader. Courts often look at how a dispute was actually run. If the same witnesses, documents and factual themes are relevant across multiple allegations, it becomes harder to argue later that one failed issue should be stripped out for costs purposes. That means document management, decision-making records and approval pathways can affect not only liability but also the eventual costs position.

For listed entities and businesses making important public statements, this starts with process. Boards and management should know who is responsible for drafting, checking and approving announcements, investor communications and responses to exchange or regulator queries. Records should show the basis for significant factual claims, assumptions and judgments. If a dispute later arises, those records may shape both the merits and the scope of the evidence that has to be led.

For businesses already in litigation, this judgment is a reminder to test arguments about issue-based costs carefully. Ask whether the issue is truly separate, whether it added materially to hearing time, whether different evidence was required, and whether the issue was reasonably run. If the answer to those questions is unclear, a court may prefer the simpler and more orthodox approach of ordering the unsuccessful party to pay the successful party's costs overall.

The interlocutory application point is also useful. A party can have substantial success on a procedural application and still not recover its costs if the practical value of that success later proves limited. Here, the defendants succeeded in getting the without prejudice letters admitted, but the trial judge later found that the letters did not materially assist on penalty. The result was a neutral costs order for that application. Businesses should therefore weigh not only whether an interlocutory step can be won, but also whether it is likely to make a real difference to the final outcome.

The costs judgment was delivered by McEvoy J in the Federal Court of Australia on 22 December 2025. The court noted that liability had been decided on 21 June 2024 and penalty on 8 August 2025. The matter was determined on the papers. The final orders were that, subject to one exception, the defendants pay ASIC's costs of and incidental to the proceeding to be taxed if not agreed, and that there be no order as to the costs of the defendants' interlocutory application dated 31 October 2024 as described in the judgment's orders and reasons.

This page should be read as a costs-focused explainer. It is not a full account of the underlying liability findings or the detailed factual allegations that led to them. Those details sit mainly in the earlier liability and penalty judgments referred to by the court.