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In the principal judgment delivered on 2 December 2015 the High Court (French CJ, Kiefel, Nettle and Gordon JJ) determined four principal issues. First, it held that an application to register a foreign judgment is a “proceeding” within the meaning of s 9 of the Immunities Act, so that Nauru prima facie enjoyed immunity from jurisdiction. Second, it held that the commercial-activity exception in s 11 of the Immunities Act applied, with the result that Nauru was not immune from jurisdiction and the registration was not to be set aside on that ground. Third, it held that Firebird had not effected service on Nauru in the manner required by the Immunities Act. Fourth, and critically, it held that Nauru remained immune from execution over the particular Australian property that Firebird had identified, by reason of the provisions of Pt IV of the Immunities Act.

The net result was that Firebird retained its registered judgment but gained no practical ability to enforce against Nauru's Australian assets. The present judgment, delivered on 23 December 2015, deals solely with the costs of the appeal to the High Court. Firebird argued that, because it had succeeded on the s 11 and service issues, the appropriate order was that each party bear its own costs or that costs be apportioned between the parties. The respondents sought an order that Firebird pay their costs of the appeal. The Court unanimously rejected Firebird's submissions and ordered the appellant to pay the respondents' costs.

Why the court decided this way

The joint judgment begins by recording the limited nature of Firebird's success. Although Firebird had prevailed on the questions whether the registration application was a “proceeding” and whether the s 11 exception applied, it had failed on the decisive issue of execution immunity. The Court noted that, regardless of the outcome on jurisdiction, Firebird still had to overcome the Court of Appeal's finding that Nauru's property was immune under Pt IV. It had not done so. Therefore, viewed from the perspective of the overall outcome of the appeal, Firebird had not improved its position in any practical sense.

The Court then addressed the two competing approaches to costs. It accepted that, if one were to count wins and losses on discrete issues, Firebird had enjoyed some success. However it held that the preferable and usual approach is that costs follow the event of the appeal as a whole. The “event” in this case was not contestable: Firebird had failed to obtain any enforceable advantage over Nauru's property. The Court expressly stated that there were “no special circumstances to warrant a departure from the general rule”.

A further, pragmatic reason was given: the Court wished to discourage future applications that descend into detailed apportionments based on the relative difficulty of issues, the time spent arguing them, and similar metrics. Such exercises, the Court observed, are productive of satellite litigation and are not to be encouraged. The fact that Firebird retained the registration on the court record was described as immaterial to the overall outcome. Accordingly the ordinary rule was applied without modification and Firebird was ordered to pay the respondents' costs of the appeal to the High Court.

Before and after state of the law

Prior to this decision the law on costs in appellate litigation in Australia was already settled in broad terms: costs ordinarily follow the event unless the court considers it appropriate to make some other order. The phrase “costs follow the event” had long been understood to refer to the overall outcome rather than success on every argument advanced. However there remained a degree of uncertainty, and some lower-court practice, about the extent to which a court might dissect an appeal into discrete issues and make costs orders that reflect partial success on those issues. Practitioners sometimes sought, and occasionally obtained, orders that apportioned costs according to the time taken on particular questions or according to who “won” specified legal points.

This judgment clarified and reinforced the orthodox position. It confirmed that the default rule remains that the successful party on the appeal as a whole receives its costs. It placed a heavy thumb on the scales against issue-by-issue apportionment, describing such applications as undesirable and noting “good reasons not to encourage” them. The decision did not alter the statutory source of the power (s 43 of the Judiciary Act 1903 (Cth) and the inherent jurisdiction) but gave authoritative High Court guidance on the proper exercise of that discretion in mixed-success appeals. After the decision, trial and appellate courts have been more cautious about departing from the general rule and more likely to treat partial success on legal questions as insufficient to displace the ordinary costs outcome where one party has clearly failed to obtain the substantive relief it sought.

Key passages with plain-English translation

The joint judgment is unusually concise. The central passage appears in the final substantive paragraph:

“In any event, the preferable approach in this case is the one usually taken, that costs should follow the outcome of the appeal. This is not a case where it may be said that the event of success is contestable, by reference to how separate issues have been determined. There are no special circumstances to warrant a departure from the general rule, and good reasons not to encourage applications regarding costs on an issue-by-issue basis, involving apportionments based on degrees of difficulty of issues, time taken to argue them and the like. The fact that Firebird retains its registration is immaterial to the overall outcome of this appeal.”

Plain-English translation: Even if you wanted to look at who won each legal fight, the Court is not going to do that here. The normal rule is that the overall winner of the appeal gets its costs. Firebird lost the fight that mattered most (enforcement against assets), so it lost the appeal. There is nothing special about this case that would justify a different order, and the Court does not want to invite parties to start arguing about exactly how many hours were spent on each point. The fact that Firebird kept the judgment on the court file does not change the fact that it could not touch Nauru's money.

An earlier passage is also significant:

“If the question of costs is to be determined on the basis of success on issues, rather than on the outcome of the appeal, these factors would not suggest as appropriate an order apportioning costs, let alone one that Firebird and Nauru pay their own costs, for which Firebird contends.”

Plain-English translation: Even on Firebird's own preferred method of counting wins and losses on each issue, the numbers still do not justify making each side pay its own legal bills. That shows how weak the argument for a special costs order really is.

What fact patterns trigger this precedent

This authority is engaged whenever an appellant enjoys success on one or more discrete legal or factual questions but fails to obtain the substantive relief it came to the appellate court to secure. Typical triggers include:

• An appellant who succeeds on a jurisdictional or procedural point but fails on the substantive cause of action or on the remedy sought.
• A party that defeats one or more immunity or limitation defences but still loses on liability or quantum.
• Appeals in enforcement proceedings (especially against foreign states or under the Immunities Act) where registration or recognition is maintained but execution is barred.
• Any case in which the court can identify a single “critical” or “decisive” issue whose resolution determines the practical outcome, even if other issues were vigorously contested and decided in the appellant's favour.

The precedent is not confined to High Court appeals; its reasoning has been applied by intermediate appellate courts and trial judges when exercising costs discretion under rules that adopt the “costs follow the event” principle. It is particularly potent where the respondent can demonstrate that, but for the point on which it succeeded, the appellant would have obtained no meaningful benefit from the litigation.

How later courts have treated it

Subsequent decisions have treated the judgment as a strong reaffirmation of the traditional rule. Courts have repeatedly cited the emphasis on the “outcome of the appeal” and the discouragement of minute issue-by-issue analysis. Judges have been reluctant to undertake the kind of granular apportionment that Firebird sought, especially where one party can be seen to have been the “real” or “overall” winner. The language that there are “good reasons not to encourage applications regarding costs on an issue-by-issue basis” has been quoted with approval when rejecting submissions that would have required the court to allocate percentages of hearing time or assess relative complexity of arguments.

The decision has been applied in commercial litigation, public-law appeals, and enforcement proceedings involving foreign states. It has not been distinguished on its core proposition that the event is the overall result rather than success on each separate question. Nor has it been overruled. Later courts have continued to recognise that special circumstances can displace the general rule, but they have required those circumstances to be clearly identified and not merely to consist of partial success on arguments that did not affect the final orders. The judgment is now routinely included in costs submissions as authority for the proposition that partial success on legal points is usually insufficient to displace the ordinary costs order.

Still-open questions

The judgment leaves several practical questions unresolved. First, what degree of overall success is required before the “event” becomes contestable? The Court did not set a bright-line test, leaving open the possibility that in a case where an appellant succeeds on issues that occupy the majority of hearing time or result in a substantial monetary saving, a different costs order might be justified.

Second, the content of “special circumstances” is not exhaustively defined. The judgment indicates that the mere fact of mixed success is not enough, but does not catalogue the factors that might rise to the required level. Later courts have treated the concept as flexible, yet the present decision suggests that the threshold is high.

Third, the judgment does not address how the principle interacts with offers of compromise or Calderbank letters. If an appellant beats an offer on the issues on which it succeeded but loses overall, the interplay between the general rule and the offer rules remains to be worked through in future cases.

Finally, the decision does not discuss the position where discrete issues are the subject of separate costs orders at first instance and the appeal concerns only one of them. The extent to which the High Court's strong preference for simplicity should influence such “costs of the costs” disputes is not settled. These open questions mean that, while the core proposition is clear, experienced practitioners must still advise clients that costs remain a discretionary matter and that careful drafting of costs submissions, grounded in the overall outcome, continues to be essential.