Australian Securities and Investments Commission v TerraCom Limited (No 2)

The second to fifth defendants put forward three possible starting points for indemnity costs. First, they said indemnity costs should run for the whole proceeding. Second, the second and fifth defendants argued in the alternative that indemnity costs should run from a mediation conducted on 24 April 2025. Third, all relevant defendants relied on the expiry of an offer of compromise on 19 June 2025. Their fallback position was ordinary costs.

ASIC accepted only the last of those positions. It agreed to pay party-party costs from the commencement of the proceeding up to 19 June 2025 and indemnity costs from 19 June 2025 onward. That concession narrowed the dispute. The real fight became whether the Court should go further and award indemnity costs for the earlier period as well.

The parties also took a practical approach to quantification. Instead of leaving costs to be taxed later, they agreed that the Court could fix costs in lump sums under the Federal Court Rules. The defendants filed evidence supporting their calculations. ASIC accepted the amounts proved in the initial affidavits, and the Court later accepted supplementary evidence for additional costs incurred after 19 June 2025. That meant the Court could make final dollar orders immediately.

The judgment gives a few glimpses of the litigation landscape. The Court referred to flaws in ASIC’s pleading, insufficiency in ASIC’s affidavit evidence, uncertainty about whether the defendants would give evidence before ASIC closed its case, and an earlier privilege ruling by Stewart J concerning one pleaded representation about a February Announcement. But those references are fragments, not a full merits narrative. Anyone wanting the complete factual story needs the earlier substantive judgment.

ASIC argued that additional considerations apply when indemnity costs are sought against a regulator. It relied on earlier authority recognising the public responsibilities of regulators and the concern that excessive readiness to award indemnity costs might deter enforcement action.

The Court accepted that regulator proceedings can involve public responsibility considerations in some contexts, particularly around settlement in civil penalty matters, but rejected any general principle that regulators occupy a special position when indemnity costs are considered.

Jackman J said ASIC has substantial executive power and litigation resources and must use them responsibly. If ASIC chooses to conduct litigation that is doomed to fail because of some policy objective, it should generally face the risk of indemnity costs like any other litigant. The Court also recognised the real consequences of failed regulator litigation for wrongly accused parties, including expense, time, personal strain and obstacles to business or career progression.

The Court drew support from earlier authority stating that the more specifically a party identifies the insurmountable obstacles faced by its opponent, the greater the likelihood of an indemnity costs order if those obstacles later prove decisive. That did not create any obligation on wrongly accused defendants to educate ASIC about its own case. The Court was clear that ASIC itself had to accept responsibility for the quality of its pleading and evidence.

But where the question is close, the presence or absence of pointed correspondence can matter.

The Court also rejected the argument that the mediation on 24 April 2025 should trigger indemnity costs. There was no evidence of what was communicated at the mediation because those communications were privileged. The Court further rejected a claim for interest on costs, accepting ASIC’s submission that the relied-on statutory provision did not confer power to order interest on costs in the way claimed.

On quantification, the Court accepted the defendants’ supplementary evidence for additional post-19 June 2025 costs and made final lump-sum orders. ASIC was ordered to pay the second defendant $1,340,998.28, the third and fourth defendants $1,398,908.18, and the fifth defendant $1,082,422.01. Those figures reflected the agreed split between ordinary and indemnity periods, together with accepted updates for later costs.

The third lesson is about documents and conduct during the proceeding. This judgment strongly suggests that if you want indemnity costs for an earlier period, it can help to have contemporaneous written correspondence that clearly identifies the fatal defects in the other side’s case. That does not mean you always should send such a letter. There may be tactical reasons not to. But if you choose silence, this case shows there may be a costs price to pay later.

The fourth lesson is about offers of compromise. Here, 19 June 2025 became the practical trigger point because ASIC accepted indemnity costs from the expiry of the offer. Businesses involved in serious litigation should treat formal offers as strategic tools, not just settlement gestures. Their timing, wording and expiry dates can materially affect the economics of the dispute.

The fifth lesson is about evidence and pleadings. The Court referred to flaws in ASIC’s pleading and insufficiency in its affidavit evidence. Whether you are bringing a claim or defending one, the quality of your pleaded case and supporting evidence can shape not only the merits but also the eventual costs order. Weak drafting, overreach and evidentiary gaps can become expensive.

Finally, the case shows the value of being ready to prove costs efficiently. The defendants provided cogent evidence that allowed the Court to fix lump-sum costs. In a large dispute, that can save time and reduce the uncertainty of a later taxation process. Businesses should keep disciplined records of legal fees, counsel fees and disbursements throughout the life of the matter.

Keep your own house in order. Make sure your evidence is complete, your witnesses are prepared, and your legal team can explain costs clearly if the Court is later asked to fix a lump sum. In this case, the defendants’ evidence on costs was accepted as cogent, and that helped produce final dollar orders without a separate assessment process.

Also remember that mediation may not help you on a later indemnity costs application if what was said there cannot be proved because of privilege. If you want a clear costs record, privileged settlement discussions may need to be complemented by non-privileged procedural steps such as formal offers or open correspondence where appropriate.