Legal framework
4 In the absence of a costs order, the party who is successful on an interlocutory application is entitled to the costs of the application: r 40.04 of the Federal Court Rules 2011. Contrary to Sea-Tech's submissions, there is no general principle that costs of interlocutory applications are "resolved" when the proceeding has been concluded.
5 By r 40.13, if an order for costs is made on an interlocutory application, the party in whose favour the order is made must not tax those costs until the proceeding in which the order is made is finished. However, the Court may order that the costs of an interlocutory application be taxed immediately in the exercise of the general power to make orders inconsistent with the Rules provided by r 1.35.
6 By s 43(3)(d) of the Federal Court of Australia Act 1976 (Cth), the Court may award a party costs in a specified sum. Although the Court's general preference, expressed in Costs Practice Note (GPN-COSTS) is in favour of making lump sum costs orders, the lump sum costs procedure is not intended to apply generally to interlocutory costs orders unless otherwise ordered: footnote 13 to the Practice Note.
7 Recognising that the circumstances in which a lump sum costs order may be made are not closed, in Clipsal Australia Pty Ltd v Clipso Electrical Pty Ltd [2016] FCA 37 at [9] to [10], Perram J identified the following matters that may justify such an order:
(1) the avoidance of the delay, expenses and aggravation arising out of taxation;;
(2) where the proceedings are complex and it may be more efficient for a trial judge to determine the issue of costs than to condemn the parties to a taxation;
(3) where there is a basis to think that the costs of the taxation themselves may turn out to be irrecoverable;
(4) where one party has been particularly truculent so that it may be thought just to spare the other from the inconvenience of further engagement over the process of taxation; and
(5) where a party has failed to appear.
8 Having declined to make a lump sum costs order in that case, at [12], Perram J also declined to grant the applicants leave to proceed to a taxation of the relevant costs orders for the following reasons:
(a) I do not think it would be desirable to make the parties go through two processes of taxation, which they will do if leave is granted and the trial costs are taxed; (b) there was nothing before me to suggest that the applicants were in particular need of the money or that the behaviour of the respondents might be criticised as being intended to draw out the proceedings to drain the applicants financially; (c) I do not accept that the conduct of the respondents was so unreasonable that the cost of their folly should be immediately visited upon them as a deterrent to such behaviour in the future; and, (d) it may be that the respondents will succeed at trial and obtain costs orders greater than those which the applicants have present secured.