Costs - successful application for costs of interlocutory hearing to be taxed and paid forthwith - matters to be taken into consideration - discrete interlocutory matter - separate from primary issue in the principal trial.

Thunderdome Racetime and Scoring Pty Ltd v Dorian Industries Pty Ltd (1992) [1992] FCA 291; 36 FCR 297

Allstate Life Insurance Co (No 14) (Lindgren J, 18 August 1995, unreported)

Allstate Life Insurance Co and Others v Australia and New Zealand Banking Group Limited and Others (No 13) (Full Court of the Federal Court of Australia, 17 August 1995, unreported)

Metcalf v NZI Securities Australia Limited (5 March 1996, unreported)

Harris v Cigna Insurance Australia Limited (1995) ATPR 41-445

Counsel for the Third, Mr Blue and Ms S Pickering

Fourth and Fifth Respondents:

Solicitors for the Third, Fisher Jeffries

Fourth and Fifth Respondents:

1. That the Flinders University of South Australia have leave to tax the costs of and incidental to the application filed by Australian Flight Test Services Pty Ltd wherein injunctive relief was sought (including the costs of this order).

2. That Australian Flight Test Services Pty Ltd pay the costs referred to in paragraph 1 hereof forthwith upon the service upon it of the allocatur.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

O'LOUGHLIN J Australian Flight Test Services Pty Ltd ("AFTS") sought injunctive relief against the respondents, the Minister for Industry, Science and Technology, the Commonwealth of Australia, the Flinders University ("the University"), Jorg Michael Hackar and Peter Schwerdtfeger. The last two named respondents, Hacker and Schwerdtfeger, are employees of the University. As the Minister and the Commonwealth gave certain undertakings that were accepted by AFTS, they played no part in these present proceedings. It will be sufficient therefore to refer to them compendiously as the "Commonwealth".

2. AFTS claimed that it and the University had, in January 1995, jointly prepared and lodged a proposal for a grant of funds from the Major National Research Facilities Program. In June 1995, for reasons at this stage unknown, the University presented another proposal which excluded any reference to the AFTS. This latter proposal was successful, entitling the University to receive a grant from the Commonwealth of $8.5 million. The Commonwealth made a first payment of $3.7 million to the University in early February 1996.

3. AFTS filed an application in this Court on 20 February 1996 by which it sought, inter alia, to prevent the Commonwealth from providing or causing to be provided further funds to the University pursuant to the grant. In response the Commonwealth gave an undertaking to the Court, the effect of which meant that the Commonwealth would not provide further money to the University pursuant to the research program for a period of 2 months. The AFTS also sought an injunction restraining the University from expending or agreeing to expend any funds received pursuant to the grant. The University resisted the claim for injunctive relief and the matter was argued before me on 28 February 1996. AFTS failed in its application. The basis of my refusal for the order sought was that it was a case where, if the applicant succeeded, damages would, in my opinion, be an appropriate remedy.

4. Counsel for the University, Mr Blue, sought an order for costs against the applicant as a consequence of the dismissal of its application for injunctive relief. He also sought an order under O62 r3 of the Federal Court Rules (the "rules") that the costs be taxed and paid forthwith thereafter. Mr Blue based his submissions on the following propositions: that the application for injunctive relief was separate and apart from the principal claims which included claims against the Commonwealth and that the University would not recover its costs for a significant period of time if it must await the conclusion of the principal proceedings.

5. Mr Greenwell, counsel for the AFTS, in opposing an order under O62 r3 referred to and relied upon the judgment of Olney J in Thunderdome Racetime and Scoring Pty Ltd v Dorian Industries Pty Ltd [1992] FCA 291; (1992) 36 FCR 297. In that case orders for costs had been made against the respondents at various interlocutory hearings. The applicants sought an order that those costs be taxed and paid forthwith. His Honour dismissed the application saying:-

"The rule does not suggest any particular criteria by which the

court should be guided in approaching such an application, and

accordingly I take the view that the discretion should be

exercised in favour of a party who establishes that the demands of

justice require that there be a departure from what appears to be

the general practice envisaged by the rule, namely, ... than an

order for costs of an interlocutory proceeding shall not entitle a

party to have a bill of costs taxed until the principal proceeding

in which the interlocutory order was made is concluded." (p312)

6. Mr Greenwell maintained that in the present case it was not in the interests of justice to divert from the general principle as stated by Olney J. He contended that the application for the interlocutory injunction did not stand alone and he disputed the submission that the trial was a long way from commencement.

7. In my opinion the interlocutory proceedings addressed a discrete issue. In practical terms AFTS had sought to prevent the University from completing its contract to purchase a high altitude aeroplane that was to form an integral part of the work program of the grant. In reality, that issue has now been disposed of. The University will proceed to expend those funds, it will buy the plane and there will be no issue at trial as to whether it should be stopped from spending that money.

8. In Allstate Life Insurance Co (No 14) (Lindgren J, 18 August 1995, unreported) his Honour said of O62 r3 that it is a provision of the Rules that "is possibly under utilised". Although he declined to make the order sought, it was only because the defending party had claimed that it had been the beneficiary of cost orders in the past against the applying party. His Honour said that as he was not familiar with the earlier history of the proceedings and as he had not been taken to that detail of it, he would not at present make the order sought but he granted leave to the applying party to apply afresh for an order under O62 r3. If such an application were made there could then be a thorough assessment of the history. His Honour concluded by saying:-

"It does seen to me, particularly in cases such as this one where

the final determination of the proceedings is so far away, that it

may be appropriate for more use to be made than is commonly made

of O62 r3."

9. Mr Blue relied upon the decisions in Allstate Life Insurance Co and Others v Australia and New Zealand Banking Group Limited and Others (No 13) (Full Court of the Federal Court of Australia, 17 August 1995, unreported) and Allstate Life Insurance Co and Others v Australia and New Zealand Banking Group Limited and Others (No 14) (supra). The Full Court proceedings dealt with a costs issue consequential upon the dismissal of an appeal from an interlocutory order. The decision of Lindgren J, although in the same action, was in respect of a different matter. In a joint judgment the Full Court said:-

"It would be wrong if the successful parties do not enjoy the

fruits of their order for costs for such a long time. The

parties entitled to the benefit of the order for costs which the

court has made in appeals from interlocutory orders should not be

deprived of their benefit until the case has been finally disposed

of."

I cannot accept Mr Blue's submission that the Full Court was thereby disapproving of the remarks of Olney J in Thunderdome (supra). In Allstate Life Insurance (No 13) there was the special feature of an unsuccessful appeal against an interlocutory order to be taken into consideration by the Full Court when it gave its decision.

10. As to the relevance of the possible length of the trial, both the Full Court and Lindgren J were influenced by the fact that the litigation was complex, was not to be heard for another eight months and, unless settled, would subsist for a substantial time. I received conflicting submissions as to the possible length, complexity and the commencement date of the trial. Counsel for AFTS was of the view that this matter was a "perfectly straightforward type of proceeding" and anticipated that the trial could commence at the end of May. On the other hand, counsel for the University argued that as a result of the complexity of these proceedings the trial will be "substantial" and it would not be ready to start for many months. At this stage, I am not in a position to determine which party has given the more accurate prediction of the length and difficulty of the trial. Therefore, I do not take these issues into account in making my decision.

11. In a recent judgment of the Full Court of the Federal Court of Australia, Metcalf v NZI Securities Australia Limited (5 March 1996, unreported) the extent of the relief awarded was a persuasive element. In that case there had been a finding against two respondents of misleading conduct that justified grants of quite extensive relief. In separate proceedings that were still on foot in a State Supreme Court, one of the respondents was suing some of the applicants and, if successful, questions of set-off might arise. The existence and prosecution of those proceedings was not considered a sufficient cause to prevent an order that the respondents pay the costs in the Federal Court proceeding without delay. In Harris v Cigna Insurance Australia Limited (1995) ATPR 41-45 Kiefel J was persuaded to make an order that costs be taxed and paid forthwith because there had been "a long delay in close of pleadings by the pursuit of an ill considered and perhaps unnecessary (interlocutory) claim". (p41,011)

12. The question that arises is whether the facts in this case are such that it is in the interests of justice to exercise the court's discretion and order that costs be taxed and paid forthwith. The element in this case that has influenced my decision to make the order sought is the importance attaching to the claim for injunctive relief. Often the essence of an application for an injunction is its urgency. Many such proceedings are won or lost within a few days. The decision to apply for an interlocutory injunction is one that should not be taken lightly. It is an application which, if successful, has serious consequences. Factors that an applicant for an injunction should take into account are the costs that are incurred by a respondent in preparing a defence to the claim for injunctive relief and the payment of the costs involved in the application should they fail to obtain an injunction.

13. In this particular case, the issue of the injunction, namely the payment of the grant and the expenditure of the grant will not be primary issues in the trial. The primary issue appears to be an investigation of why, how and when the University made the second unilateral application for a share. Because that issue is separate and apart from the relief sought at the interlocutory level, I have concluded that the University should succeed. I order that the University have leave to tax the costs of and incidental to the application filed by AFTS wherein injunctive relief was sought (including the costs of this order) and that the applicant pay those costs forthwith upon service of the allocatur.