Faruqi v Latham

1. The applicant's application for the costs of the applicant's interlocutory application filed 14 December 2017 and the respondent's interlocutory application filed 11 December 2017 to be taxed and payable forthwith be refused. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

WIGNEY J: 1 On 30 August 2018, I handed down a judgment and made orders striking out Mr Mark Latham's defence in this matter. The orders included an order that Mr Latham pay Mr Osman Faruqi's costs in relation to the application to strike out the defence and any costs thrown away. When I handed down judgment, counsel for Mr Faruqi applied for an order that the costs be payable forthwith. I indicated at the time that, if such an application was to be pursued, it should be pursued at the next case management hearing. Mr Faruqi has renewed that application today. 2 The ordinary rule is that costs ought to be resolved when the proceeding has been concluded: see r 40.13 of the Federal Court Rules 2011 (Cth). The Court does, however, have a discretion to dispense with r 40.13 and order that costs be payable forthwith. 3 The relevant principles in relation to the exercise of that discretion were conveniently summarised in the judgment of Bennett J in Spotwire Proprietary Limited v Visa International Services Association (No. 2) [2004] FCA 571, which concerned the equivalent rule, Order 62, r 3, in the previous Rules. Her Honour said (at [104]): From the cases that have discussed Order 62 rule 3, such as Life Airbag Co of Australia Pty Ltd & Ors v Life Airbag Co (New Zealand) Ltd [1998] FCA 545, Thunderdome Racetiming and Scoring Pty Ltd v Dorian Industries Pty Ltd 36 FCR 297, Allstate Life Insurance Co. v Australia & New Zealand Banking Group Ltd (No 14) [1995] FCA 660, Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd (No 13) [1995] FCA 626, Vasyli v AOL International Pty Ltd [1996] FCA 804, McKellar v Container Terminal Management Services Ltd [1999] FCA 1639, Brasington v Overton Investments Pty Ltd [2001] FCA 571, Eunson v Beaulieu United Ltd (2002) 190 ALR 110, Murran Investments Pty Ltd v Aromatic Beauty Products Pty Ltd (2000) 191 ALR 579, Bailey v Beagle Management Pty Ltd (2001) 105 FCR 136, Australian Competition and Consumer Commission v Chaste Corp Pty Ltd (in liq) (2003) 127 FCR 433 and Bridgetown Greenbushes/Friends of the Forest Inc v Department of Conservation and Land (unreported, Western Australian Supreme Court, 30 April 1997) , the following principles emerge: • The general principle is that costs ought to be resolved when the proceeding has been concluded and the rights of the parties have been finally determined. However, Order 62 rule 3(3) contemplates that, in certain circumstances, the general principle can be varied, as a matter of the court's discretion. • The exercise of the discretion should only be exercised where the interests of justice in the particular case require a departure form [sic] the general practice. • The discretion should be exercised in favour or 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. • One consideration is the length of time that the proceedings will conclude, in the ordinary course of events. • Where costs are sought in respect of a successful strike out application, the fact that the unsuccessful party failed to remedy defects despite clear notice of those defects, may make appropriate immediate taxation and payment. • Costs incurred by reason of an ill-considered pleading may give rise to an exception to the principle that the costs await the final resolution of the issues between the parties. • In ordinary circumstances, it would be inappropriate that an unsuccessful party in an interlocutory proceeding be required to pay costs immediately, since that party might ultimately be entitled to an order for costs in the substantive proceeding. 4 It can be seen that one circumstance which may justify a departure from the ordinary rule is where costs have been incurred by reason of an ill-considered pleading. I think it is fair to say that the defence that was initially filed by Mr Latham in this matter was an ill-considered pleading. That much is apparent from my reasons for striking the pleading out. I am not satisfied, however, that that alone provides a reasonable basis to order that the costs be payable forthwith. No doubt, Mr Faruqi incurred some costs in arguing that the pleading should be struck out. I am not persuaded, however, that those costs would be substantial, or that there were any other significant costs thrown away by Mr Faruqi in endeavouring to meet the defence, as originally filed. 5 Mr Latham has now retained new solicitors and counsel and has, with leave, filed an amended defence, which is very narrow in compass. Having regard to the narrow scope of the defence, the matter should, from this point on, proceed efficiently and fairly quickly. That is an important consideration in determining whether the costs should be payable forthwith. It is also the case, as was submitted on Mr Latham's behalf, that the purpose of making an order that costs be payable forthwith is not to punish the unsuccessful party. Rather, it is to ensure that the successful party is compensated sooner rather than later. Having regard to the fact that the matter is now likely to proceed fairly swiftly to hearing, I do not think that an order requiring that the costs be taxed and payable forthwith is warranted. I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wigney.