Procedure - Costs - Recovery of costs - When costs taxable - When costs order takes effect - Meaning of "costs in any event" - No right to taxation until the event has occurred. words and phrases "costs in any event".

Adam & Harvey, Ltd v International Maritime Supplies Co, Ltd [1967] 1 All ER 533; J T Stratford & Son, Ltd v Lindley and Others (No 2) [1969] 3 All ER 1122; Allied Collection Agencies Ltd v Wood and another [1981] 3 All ER 176, applied. Supreme Court Civil Procedure Act 1932 (Tas), s12(1). Rules of Court (Tas), O80, r1. (Aust Dig Procedure [659]).

HOBART, 2 December 1997 (hearing), 5 December 1997 (decision)

On 27 May 1997 the appellant commenced an action to recover the value of one of its vehicles that was damaged in an accident and associated losses. The action was brought against the respondent and his daughter. The writ was served upon the respondent but an appearance not entered within the time limited by the Rules of Court. On 12 June 1997 a default judgment for damages to be assessed was entered against the respondent. On 1 August 1997, the respondent filed an application to set aside the judgment. It was determined by the Master on 16 September 1997 who made an order setting aside the judgment and giving leave to enter an appearance. The Master reserved the question of costs. On 28 October 1997, the Master heard argument with respect to an appropriate order for costs. On that day, the Master made an order:

"That the defendant pay the plaintiff's taxed costs of and incidental to the application [to set aside judgment] and any costs thrown away as a result of the application in any event."

The appellant has brought an appeal against that order. Although the order was made in favour of the appellant, its complaint is that the words "in any event" reflect an error in the proper exercise of the discretion. Miss Bannon appeared for the respondent but did not wish to make any submissions.

Central to the determination of this appeal is the meaning of the expression "in any event".

The jurisdiction to make an order for costs upon the determination of an interlocutory application is conferred by the Supreme Court Civil Procedure Act 1932, s12 and again by the Rules of Court, O80, r1(1) which provides:

"1 -- (1) Subject to the provisions of the Act and these rules, the costs of and incidental to all proceedings in the Court, including the administration of estates and trusts, shall be in the discretion of the Court or judge."

Mr McKee who appeared for the appellant, submitted that an order for costs "in any event" meant that:

1 the beneficiary of the order was entitled to recover his taxed costs of the action regardless of the ultimate outcome of the action; but

2 he was not entitled to bring in a bill for taxation of those costs until after the occurrence of "the event", usually, final judgment.

Mr McKee referred to Adam & Harvey, Ltd v International Maritime Supplies Co, Ltd [1967] 1 All ER 533. In that case, Harman LJ (with whose judgment the other members of the Court agreed) held that an order for costs entitled the successful party to have his costs taxed and paid forthwith, but although an order for costs "in any event" entitled the successful party to the costs of the proceeding to which the order related regardless of the ultimate outcome of the litigation, such costs were neither taxable nor payable until the occurrence of the "event". In his reasons, Harman LJ made reference to the English Rules of Court, O62, r4(1) which has no equivalent in the Rules of Court (Tas). It provides:

"4 -- (1) Costs may be dealt with by the Court at any stage of the proceedings or after the conclusion of the proceedings; and any order of the Court for the payment of any costs may, if the Court thinks fit, and the person against whom the order is made is not an assisted person require the costs to be paid forthwith notwithstanding that the proceedings have not been concluded."

That rule did no more than reflect the practice in the Queens Bench Division prior to the enactment of the Judicature Acts 1873 - 1875, viz, that absent words of limitation, an order for costs entitled the beneficiary to tax and recover costs forthwith. See Phillips v Phillips (1879 - 1880) 5 QBD ,he position is now different in the United Kingdom. The Rules of Court, O62, r8 now provides in effect, that the taxation and recovery of costs shall, in the absence of other order, await the conclusion of the proceedings.) In Adam & Harvey, Ltd v International Maritime Supplies Co, Ltd (supra) Harman LJ confessed that he was under a mistaken belief that unless the court ordered that costs were payable forthwith, they were not payable until after the conclusion of the proceedings.

Denning MR dealt with the practice relating to orders for costs of interlocutory proceedings in his inimitable style in J T Stratford & Son, Ltd v Lindley and Others (No 2) [1969] 3 All ER 1122 when he said, at 1123:

"There is no definition in any law book of the words 'costs in the cause'. But every pupil on his first day in chambers is told what it means. 'Costs in the cause' means that the costs of those interlocutory proceedings are to be awarded according to the final award of costs in the action. If the plaintiff wins and gets an order for his costs, he gets those interlocutory costs as part of his costs of the action against the defendant. Vice versa, if the defendant wins and gets an order for his costs, he gets those interlocutory costs as part of his costs of the action against the plaintiff. (I may add in parenthesis that 'plaintiff's costs in the cause' means that, if the plaintiff wins, he gets the costs of the interlocutory proceedings; but, if he loses, he does not have to pay the other side's costs of them. 'Plaintiff's costs in any event' means that, no matter who wins or loses when the case is decided, the plaintiff is to have the costs of those interlocutory proceedings. 'Plaintiff's costs' means that the plaintiff is to have the costs of the interlocutory proceedings without waiting for a decision.)"

The authorities to which I have referred were the subject of careful analysis by Neill J in Allied Collection Agencies Ltd v Wood and another [1981] 3 All ER 176. His Honour expressed the following view at 181:

"I can therefore state my conclusion as follows. (1) Where on an interlocutory application the court intends that one party is to have the costs, the usual form of order is 'costs in any event'. It is only in exceptional circumstances that the words 'defendant's costs' or the words 'plaintiff's costs' are used. (2) If the words 'plaintiff's costs' or 'defendant's costs' are used they are effective to entitle the party concerned to obtain an immediate taxation."

There does not seem to be any doubt then, that in the United Kingdom the expressions "plaintiff's costs", "defendant's costs" and "costs in any event" bear the meaning ascribed to them by Neill J (supra), although the practice is now expressly spelled out by O62.

In New South Wales, this question was considered by Master Allen in Bertram v Beaurepaire Tyre Service Pty Ltd (1975) 4 NSWLR 685. In his reasons for judgment the learned Master cited the Rules of Court (NSW), Pt52, r5 which, at that time provided, as did the then English Rules of Court, O62, r4(1), that the Court may require that costs be paid forthwith. The learned Master said that many might think that if an order was made for the payment of costs without an order that those costs be paid forthwith, such costs would not be payable until the proceedings had concluded. He said that those who were of that belief were mistaken but in the good company of Harman LJ in Adam & Harvey, Ltd v International Maritime Supplies Co, Ltd (supra). The learned Master said that the correct interpretation of that rule and the practice was that interlocutory orders for costs that were not expressed to be "in any event" were taxable and payable forthwith. The learned Master went on to observe at 686, that the English rule first appeared in 1959 and that the note to the Annual Practice (1961) stated that although the rule was new, it did no more than state the general practice. That general practice was that, except in unusual cases where a party was entitled to costs of interlocutory proceedings, those costs were neither taxable nor payable until after the event. However, if the order for costs was not expressed to be in any event, the operation of the Rules of Court made them payable forthwith. It may be noted that the current Rules of Court, Pt52, r9A (NSW) now provide, in effect, that an order for the costs of interlocutory proceedings does not entitle the successful party to payment of those costs until after the conclusion of the proceedings unless the Court otherwise orders, although the bill may be taxed before then.

The Full Court of the Supreme Court of Western Australia considered this matter in Stowe and Another v Stowe, unreported 16 October 1995, and applied the same interpretation to the expressions "plaintiff's costs" and "costs in any event" as was applied by the English practice prior to a change to the Rules of Court (UK) in 1986. In Western Australia the relevant Rule of Court, which is to the same effect as the former O62, r4, (UK) provided:

"Costs may be dealt with by the court at any stage of the proceedings or after the conclusion of the proceedings, and any order of the court for the payment of costs may require the costs to be paid forthwith notwithstanding that the proceedings are not concluded."

Reference to Civil Procedure (South Australia), Lunn and the notes to r101.00.20 and to Supreme Court Practice (Queensland), Ryan, Weld and Lee and the notes to O91, r1, show that the practice in both Queensland and South Australia is the same as the former practice in England. It may be noted that the current Federal Court Rules, O62, r3(3) reflects the general principle for the exercise of the discretion that, absent special order of the court, taxation and payment of costs of interlocutory applications are postponed until the outcome of the litigation.

The Rules of Court (Tas) contain no equivalent to the former O62, r4 (UK) which was in force at the time the English cases to which I have referred were decided. However, it may be noted that the present O80, r1 (Tas) (enacted in 1932 as O68, r1) is taken directly from the Rules of Court O65, r1 (UK) prior to its amendment in 1959. It may be inferred that the intention was that the English practice would be adopted, viz, that except in unusual cases, costs of interlocutory proceedings were neither taxable nor recoverable until the conclusion of the proceedings and that this was signified by the expression "in any event". This long-standing practice was confirmed in the United Kingdom by the 1959 amendments that added a new set of costs rules including what later became O64, r2(1). The omission to enact a similar rule in Tasmania, confirming long standing practice, does not mean that there has been any alteration to that practice. Accordingly, I construe the expression "in any event" in the order that is under attack in this appeal to mean that the appellant is not entitled to either tax or recover its costs until the conclusion of the litigation, but that on the happening of that event, the appellant is entitled to recover the costs of the proceedings to set aside judgment regardless of the ultimate outcome of the litigation. If the action is compromised before trial but the order overlooked, the appellant will still be entitled to tax and recover those costs. See Walter v Berwicke Moreing & Co (1904) 90 LT 409.

How should the discretion be exercised? I see no reason to interfere with the terms of the order made by the learned Master. Although the discretion to order costs conferred by the Supreme Court Civil Procedure Act 1932 and the Rules of Court is unfettered, Harman LJ in Adam & Harvey, Ltd v International Maritime Supplies Co, Ltd (supra) made it clear at 534, that, in his opinion, it was only in exceptional circumstances that a successful party on an interlocutory application was entitled to recover costs without awaiting the outcome of the action. Neill J appears to express approval of that general statement in Allied Collection Agencies Ltd v Wood and another (supra) at 181. That approach has received endorsement by the Rules of Court in the United Kingdom, New South Wales, the Northern Territory (O63.02(2)) and of the Federal Court.

There are good reasons for this approach. The appellant may be unsuccessful in the ultimate outcome of these proceedings, in which case any amount of costs recoverable by it against the respondent will be set off against the costs that it has to pay the respondent. Application of the practice will reduce the administrative burden and costs of several taxations. During the course of litigation there may well be several orders for costs, some of which will be in favour of one party and some of which will be in favour of the other party. Common sense dictates that the final calculation of various orders for costs should await the outcome of the litigation. Interlocutory orders for costs usually involve relatively small sums of money which do not warrant the trouble and expense of several taxations and enforcement proceedings. Further, the enforcement of orders for costs of interlocutory proceedings should not be used as a "lever" to persuade an impecunious party from prosecuting or defending the principal issues in the litigation. Of course, every case will turn upon its own facts, but in this case I see no reason to depart from what should be the ordinary exercise of the discretion in the making of an order for costs of interlocutory proceedings where it is appropriate that the successful party should have the costs of those proceedings viz, that they should be payable in any event.