Grace v Grace

Judgment 1The plaintiff applies by interlocutory process filed on 17 March 2014 for an order pursuant to (NSW) Civil Procedure Act 2005 ("CPA"), s 101(4), that the first and second defendants ("the defendants") pay interest on the costs the subject of Order 1 made on 28 March 2013, whereby the Court ordered that the defendants pay 62.5% of the plaintiff's costs of the proceedings, including of the cross-claim, as assessed. The defendants oppose the order sought, contending that (1) the costs of so much of the proceedings in this Court as were proceedings under (CTH) Family Law Act 1975 ("FLA"), s 79A and s 79 ("the FLA proceedings"), are governed by FLA, s 117, and there is no power to award interest on costs analogous to CPA s 101(4) in respect of costs ordered under FLA s 117; (2) the plaintiff is out of time to bring the application; (3) the plaintiff has adduced none of the evidence necessary to support such an order, and in particular evidence of payment of costs and when they were paid; and (4) relevant discretionary considerations, including delay in the proceedings on the part of the plaintiff, futile amendments, and the lengths to which the plaintiff has gone to buttress his case, tell against making such an order. 2The essential issues are: (1)Does FLA, s 117B confer power to order interest on costs? If not, is CPA s 101(4) inconsistent with the FLA in its application to proceedings under the FLA and, to that extent, invalid, or does (CTH) Jurisdiction of Courts (Cross-Vesting) Act 1987, s 11 or (CTH) Judiciary Act 1903, s 79 make it applicable so as to authorise an order for interest on costs of the FLA proceedings; (2)Must an order for interest on costs be sought at the time when the costs order to which it relates ("relevant costs order") is made; (3)Must evidence of payment of costs, and/or explaining the course of the proceedings, be adduced to support an application for an order for interest on costs; (4)How do relevant discretionary considerations inform the determination of the application?

Family Law Act, s 117 3The defendants submit that the power to make an order as to the costs of the FLA proceedings in this Court is sourced in FLA s 117 and not in CPA s 98; that there is no power in the FLA to make an order for interest on costs analogous to CPA s 101(4); that CPA s 101(4) is, in its application to proceedings in this Court under the FLA, inconsistent with FLA ss 117 and 117B, and invalid to that extent; and that the 62.5% of the plaintiff's costs which the defendants are liable to pay under the order of 28 March 2013 cannot sensibly be delineated between the proceedings under the FLA and the balance of the proceedings. (The invalidity argument was raised at a late stage, in supplementary written submissions after the hearing, and notice of a constitutional matter was then given under Judiciary Act, s 78B). The plaintiff submits that even if the power to make a costs order in respect of the proceedings under FLA ss 79A and 79 depends on s 117, power to award interest on costs from a date earlier than the date of the costs order is conferred by FLA s 117B(2)(b), and alternatively that CPA s 101(4) is nonetheless made applicable, by operation of the Cross-Vesting Act, s 11 or the Judiciary Act, s 79, so as to authorise an order for interest on costs. 4The substantive proceedings in this Court included, but were not limited to, proceedings under the FLA. Insofar as the plaintiff sought (pursuant to FLA, s 79A) to set aside the 1995 Consent Order, and insofar as the second defendant cross-claimed for a new s 79 order, the proceedings were proceedings under the FLA. Otherwise, that is, the Administration case insofar as it concerned the transfer of the cumulative preference shares and the failure to transfer the trust shares, the Oppression case, the NISF case, and the Cross-claim insofar as it concerned the winding-up of the Nevilda companies and the Family Provision application, they were not ("the non-FLA proceedings"). 5CPA, s 98 relevantly provides as follows: 98 Courts powers as to costs (cf Act No 52 1970, section 76; SCR Part 52A, rules 5, 6, 7 and 8; Act No 9 1973, section 148B; Act No 11 1970, section 34) (1) Subject to rules of court and to this or any other Act: (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis. (2) Subject to rules of court and to this or any other Act, a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court. (3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings. (4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to: (a) costs up to, or from, a specified stage of the proceedings, or (b) a specified proportion of the assessed costs, or (c) a specified gross sum instead of assessed costs, or (d) such proportion of the assessed costs as does not exceed a specified amount. 6FLA, s 117 relevantly provides as follows: 117 Costs (1) [Each party bears own costs] Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118 , each party to proceedings under this Act shall bear his or her own costs. (2) [Costs order as court thinks just] If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just. (2A) [Considerations relevant] In considering what order (if any) should be made under subsection (2), the court shall have regard to: (a) the financial circumstances of each of the parties to the proceedings; (b) whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party; (c) the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters; (d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court; (e) whether any party to the proceedings has been wholly unsuccessful in the proceedings; (f) whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and (g) such other matters as the court considers relevant. 7The proceedings involved cross-vested jurisdiction under the FLA, and FLA, s 117 formed part of the cross-vested jurisdiction. I accept that the costs order of 28 March 2013 depended, insofar as it concerned costs of the FLA proceedings, on FLA, s 117(2), and insofar as it concerned the costs of the balance of the proceedings, on CPA s 98(1). In the submissions made on the original costs application, no attention was given, on either side, to the specific factors listed in FLA, s 117(2A) - and thus they were not specifically addressed in the judgment [Grace v Grace (No 4) [2013] NSWSC 385] - presumably because (1) no party suggested it to be a case in which each party should bear its own costs, (2) in the particular context of this litigation, all accepted that the factors that were material to the exercise of the costs discretion in respect of the FLA proceedings were the same considerations as informed the costs discretion in respect of the non-FLA proceedings; and (3) all parties recognised that the overlapping issues made it impracticable to segregate them for the purposes of costs. 8However, for the reasons that follow, I do not accept that the FLA contains no power to make an order for interest on costs ordered under s 117(2). Family Law Act, s 117B, provides as follows: 117B Interest on moneys ordered to be paid (1) [Date from which interest payable] Subject to any order made by the court under subsection (2), where, in proceedings under this Act, a court makes an order for the payment of money (other than an order for the payment by way of maintenance of a periodic sum), interest is payable, at the rate prescribed by the applicable Rules of Court, from: (a) the date on which the order is made; or (b) the date on which the order takes effect; whichever is later, on so much of the money as is from time to time unpaid. (2) [Variation of interest period, rate] A court that makes an order for the payment of money as mentioned in subsection (1) may order that interest is not payable on the money payable under the first-mentioned order or may order: (a) that interest is payable at a rate specified in the order, being a rate other than the rate prescribed by the applicable Rules of Court; or (b) that interest is payable from a date specified in the order, being a date other than the date from which the interest would be payable under subsection (1). 9The defendants' submission, that an order for the payment of costs (to be taxed or assessed) is not "an order for the payment of money" for the purposes of FLA, s 117B, cannot be accepted, in the light of a long line of decisions on similar provisions. In what follows, I have endeavoured to collect those aspects that are important for the purposes of this and the other issues that I must decide. More comprehensive discussion of the cases may be found in the judgment of Kelly J in Tarlinton v Hall (1981) 51 FLR 282; 38 ACTR 1; the speech of Lord Ackner in Hunt v R M Douglas (Roofing) Ltd [1990] 1 AC 398; the judgment of Smart J in Fischer v David Syme & Co Ltd (1989) 18 NSWLR 606; and the judgment of Young AJA (as he then was) in Minister Administering the Environmental Planning and Assessment Act 1979 v Carson (1994) 35 NSWLR 342, to all of which I am indebted. 10Prior to the (UK) Judgments Act 1838, interest on costs could not be recovered. Section 17 of that Act provided that every judgment debt should carry interest at the rate of 4% per annum from the time of entering up the judgment until the sum should be satisfied, while s 18 provided that all decrees and orders of courts of equity whereby any sum of money or any costs, charges, or expenses should be payable to any person should have the effects of judgments in the superior courts of common law. Except for amendments of the interest rate, these sections remained in operation and were still in the same form in 1990, when the House of Lords decided Thomas v Bunn [1991] 1 AC 362. As Lord Ackner explained in that case (at 380E), from its enactment it was accepted that s 17 applied to orders for costs to be taxed - even though before taxation was completed there was no sum for which execution could be levied - and did so from the date of the order (the incipitur rule), not the date of the certificate of taxation (the allocatur rule), although the latter rule had for a while prevailed in Chancery. Arguments that s 17 did not apply to such a costs order had earlier been rejected by the Court of Appeal in Erven Warnink BV v J Townend & Sons (Hull) Ltd (No 2) [1982] 3 All ER 312, 319-20, and by the House of Lords in Hunt v R M Douglas (at 416). 11The same approach applied under (NSW) Common Law Procedure Act 1899 ("CLPA"), which provided under s 143(1): Every judgment debt recovered in the Court shall carry interest at the rate of seven per centum per annum from the time of entering up the judgment until the same is satisfied. 12Subsequent amendments - including to allow the rate of interest to be varied by rules of court - were immaterial for present purposes. As Smart J demonstrated in Fischer v David Syme (at 614-5), successive editions of the Supreme Court Practice stated that this section applied to a judgment for costs, and that interest ran on costs from the date of the judgment, not the date of ascertainment by taxation. 13In 1965, s 143A was introduced into the CLPA to modify the then prevailing practice: 143A. Notwithstanding anything in sections one hundred and forty-two and one hundred and forty-three - (a) Interest shall not be payable on the amount of the verdict if such amount is paid to or at the direction of the plaintiff within twenty-one days after the date of verdict; (b) Interest shall not be payable on costs payable to the plaintiff if the amount of such costs is paid within twenty-one days after assessment or after taxation. 14That provision assumed that an order for costs was within the meaning of "judgment debt", and its effect - as explained by Smart J in Fischer v David Syme (at 616-7) - was that if the taxed costs were not paid within 21 days of taxation, the interest was payable from the date of the relevant costs order, not the date of the certificate of taxation (the incipitur rule). As his Honour also explained (at 615), the introduction of s 143A was probably a response to demands for interest (on damages as well as on costs) in personal injuries cases, which then dominated the Court's common law jurisdiction, and in which costs and disbursements were usually not paid until shortly before taxation [see also Grogan v Thiess Contractors Pty Limited [2000] NSWSC 1101, [8]]. A different practice applied in equity, where the allocatur rule was applied, in conformity with the pre-judicature practice in Chancery in England [Re North Sydney Investment and Tramway Co Ltd (1897) 18 LR (NSW) (Eq) 50; Re Acetylene Gas Co of Australasia Ltd (1901) 1 SR(Eq)(NSW) 102, 108; McPhillamy v Campbell (1924) 24 SR (NSW) 211, 213]. But when judicature eventually came to New South Wales in 1970, the (NSW) Supreme Court Act 1970 ("SCA") substantially continued the provisions of the CLPA, which thereafter applied in equity as well as at common law. SCA, s 95 provided as follows: (1) Where judgment is given or an order is made for the payment of money, interest shall, unless the Court otherwise orders, be payable at the prescribed rate from the date when the judgment or order takes effect on so much of the money as is from time to time unpaid. (2) Notwithstanding subsection (1), where, in proceedings on a common law claim, the Court directs the entry of judgment for damages, and the damages are paid within twenty-one days after the date of the direction, interest on the judgment debt shall not be payable under subsection (1) unless the Court otherwise orders. (3) Notwithstanding subsection (1) where, in proceedings for damages on a common law claim, the Court makes an order for the payment of costs and the costs are paid within twenty-one days after ascertainment of the amount of the costs by taxation or otherwise, interest on the costs shall not be payable under subsection (1) unless the Court otherwise orders. 15Subsection (3) indicates that an order for costs is a "judgment ... or an order ... for the payment of money" within s 95(1), and Fischer v David Syme - since approved by the Court of Appeal in Minister v Carson - shows that it attracted interest from the date of the order, except where it was brought within the exception in subsection (3). The words "order ... for the payment of money" were used in addition to "judgment", it would appear, in order to make clear that all orders for payment of money - including those made in the equitable jurisdiction, and not only judgment debts at common law - were captured. Subsections (2) and (3) were deliberately retained: the report of the New South Wales Law Reform Commission on Supreme Court Procedure (1969) NSWLRC 7 observed (at 14): ... Interest is payable on a judgment debt at a prescribed rate on so much as from time to time remains unpaid (section 95(1)). Nevertheless, we have included a provision to continue the substance of the present rule that, in common law claims, interest is not payable on the amount of a verdict if paid within 21 days nor upon costs if paid within 21 days of taxation, unless the Court otherwise orders (section 95(2), (3)). 16In (NSW) Land and Environment Court Act 1979 ("LECA"), s 69A - which was inserted in 1989 - made broadly similar provision to SCA, s 95, though it did not contain the exceptions in SCA, s 95(2) and (3). It provided as follows: (1) If an order is made by the Court for the payment of money, interest is payable at the prescribed rate from the date the order takes effect on so much of the money as is from time to time unpaid, unless the Court otherwise orders. 17Notably, that section (like FLA, s 117B) used the terminology from SCA, s 95 of "an order for the payment of money". In Minister v Carson, the Court of Appeal held that that included an order for costs. Kirby P (at 346) said that while a question might arise as to whether it was addressed to an order for costs at all, that possibility could be set aside, referring to Thomas v Bunn, and also to the concession by the Solicitor-General that: Section 69A, inserted in 1989, effectively replicated s 95(1) of the Supreme Court Act. In 1989, s 95(1) would have been regarded as embracing orders for costs, if only because of s 95(3) 18Young AJA said (at 356C): An order for costs falls within this subsection; Thomas v Bunn [1991] 1 AC 362 at 380. 19SCA, s 95 was amended in 1995 by the insertion of s 95(4), which was the precursor of the current CPA, s 101(4), and provided: (4) If an order is made for the payment of costs, the Court may order that interest is to be paid on the amount so ordered, at the prescribed rate referred to in subsection (1), from the date or dates when the amount in respect of costs was duly paid. 20This amendment was a response to observations of Rogers CJ CommD in McWilliams Wines Pty Ltd v Liaweena (NSW) Pty Ltd (1993) 32 NSWLR 190, where his Honour was concerned with an application for an order that the defendant pay interest on the amount of taxed costs from the dates on which the plaintiff had paid its solicitors. His Honour appears to have accepted that, because subs 95(2) and (3) were confined in their operation to a "common law claim", s 95 made no provision in respect of interest on damages or costs except on a common law claim. This, with respect, overlooked that subs 95(1), which was of general application, made such provision, and subs (2) and (3) simply provided exceptions - which themselves could be dispensed with - in the case of common law claims, if the money was paid promptly after judgment or taxation as the case may be. 21His Honour found power to make an order for interest on costs from a date before the date of judgment in SCA, s 76 (the predecessor of CPA, s 98). However, that view is no longer open: the source of power to order interest on costs is not CPA, s 98 (formerly SCA, s 76) but CPA, s 101 (formerly SCA, s 95) [White Industries (Qld) Pty Limited v Flower & Hart (No 2) (2000) 103 FCR 559; affirmed Flower & Hart v White Industries (Qld) Pty Limited [2001] FCA 370; (2001) 109 FCR 280; approved Spedding v Nobles (No 2) [2007] NSWCA 87, [15], [17], [18]; applied Short v Crawley (No 45) [2013] NSWSC 1541, [72]-[73]; Wardy v Wardy (No 2) [2014] NSWSC 809, [34]]. 22The effect of the introduction into SCA, s 95 of subs (4) was thus to confer a general discretion to order interest on costs not only from the date of judgment, but from the date of payment, if the successful party had paid its solicitors before the date of judgment. As Basten JA explained in Spedding v Nobles: 11 It is clear from the terms of this section that an order for payment of money would, pursuant to s 95(1) ordinarily carry interest from the date when the order was made or took effect, which included the amount of any costs ordered to be paid. Subsection (3) made an exception, in relation to proceedings for damages on a common law claim, so that interest was not payable on the costs if they were paid within 21 days of assessment, unless the court otherwise ordered. Read in context, the effect of the court otherwise ordering would provide for interest to be payable from the date of judgment, whether or not the costs were paid within 21 days of assessment. 12 The second relevant provision, namely sub-s 95(4), confers a power to award interest on costs, but limited to interest from the date on which the costs were duly paid, presumably by the party to his or her lawyer. 23However, the introduction of the CPA in 2005 changed this, because CPA s 101(1) - which otherwise reproduced SCA, s 95(1) - expressly excluded a costs order. This had the consequence that, whereas previously the default position was that interest was payable on a costs order from the date of the costs order (s 95(1)), subject to the exceptions in s 95(2) and (3), after 2005 no interest is payable on costs without a special order of the court under s 101(4). If an order is made, interest on costs may be ordered to run from the dates the costs were actually paid, or any later date specified in the costs order. Again as Basten JA pointed out in Spedding v Nobles: 14 The Civil Procedure Act makes different provision in s 101 in that the statutory scheme for interest on the amount of a judgment, is expressly stated to be "exclusive of any order for costs": sub-s 101(1). Subsections 101(4) and (5) provide: "(4) The court may order that interest is to be paid on any amount payable under an order for the payment of costs. (5) Interest under subsection (4) is to be calculated, at the prescribed rate or at such other rate as the court may order, as from: (a) the date or dates on which the costs concerned were paid, or (b) such later date as the court may order." 15 There are a number of changes in s 101, which make the caselaw with respect to s 95 of limited operation. First, it is clear that interest does not run on a costs order, unless the court expressly so orders under sub-s (4). Further, the court may order such interest from the date when the costs were paid, again presumably by the client to his or her legal representative, or from such later date. 24In referring to an "order for the payment of money", FLA, s 117B uses the same language as SCA, s 95(1) and LECA, s 69A. It does not contain the exception in respect of costs now found in CPA, s 101(1). The cases to which I have referred establish that such language in the context of a provision for post-judgment interest catches orders for costs, notwithstanding that the costs are yet to be taxed or assessed. As Kelly J explained in Tarlinton, when an order is made that a party pay the costs of another party, the judgment debt thereby created has the character of a debt owed at the present time although payable in the future (debitum in praesenti, solvendum in futuro) (at 6). 25Accordingly, an order for costs (under FLA, s 117) is an order for the payment of money within FLA, s 117B. While absent any further order, interest on costs pursuant to such an order would run from the date of the costs order (under FLA, s 117B(1)), FLA, s 117B(2)(b) authorises the court to specify another date from which interest is to run, and that date can be earlier or later than the date of the relevant costs order. 26It follows that while, if the Court does not make an order under FLA, s 117B(2), interest is payable pursuant to s 117B(1) on so much of the costs ordered to be paid by the defendants as relate to the FLA proceedings from the date of the relevant costs order (namely 28 March 2013), the Court is empowered by s 117B(2)(b) to order that interest be payable from an earlier date. This provides the power to make an order for interest on costs from the date they were paid, in respect of the costs of the FLA proceedings. Concurrently, CPA, s 101(4) confers power to make such an order in respect of the costs of the non-FLA proceedings. While the sections are expressed in different words, and the default position is different, each gives power to make an order that will have the same effect. The Court therefore has power to make the order sought, both in respect of any order made as to the costs of the FLA proceedings (under FLA, s 117B(2)(b)), and in respect of any order as to the costs of the non-FLA proceedings (under CPA, s 101(4)). 27It follows that no question of inconsistency between the two provisions arises, and I am also relieved of the need to address whether the Cross-Vesting Act or the Judiciary Act would make CPA, s 101(4) applicable to proceedings in this Court under the FLA. Because the suggested Constitutional issue does not require adjudication and the other issues are severable from it, Judiciary Act, s 78B(2) permits me to proceed to determine the matter.

Time for application 28The order for costs was made on 28 March 2013. No application for interest was made at that time. No application was made to vary the order of 28 March (by including interest) within the period of 14 days thereafter, prescribed by Uniform Civil Procedure Rules r 36.16. The defendants appealed from the order, by notice of appeal filed on 28 June 2013, and the appeal was dismissed, for want of jurisdiction, on 3 March 2014 [Grace v Grace [2014] NSWCA 86]. The defendants submit that with no application for interest having been made when the relevant costs order was made on 28 March 2013 or within 14 days thereafter, it is not open to make such an order now. 29The defendants rely in that respect on Zepinic v Chateau Constructions (Australia) Ltd (No 2) [2013] NSWCA 227, in which McColl JA held (at [86]-[88]) that an application for an interest on costs order under CPA, s 101(4) had to be made when the relevant costs order was made, or within the 14-day period referred to in UCPR r 36.16 thereafter, and that earlier cases - which had held that an interest on costs order could be made after the relevant costs order, so long as it was made before the costs assessed pursuant to the order were registered as a judgment - failed to recognise the limited effect of registration. The plaintiff invokes Short v Crawley, in which White J explained (at [66]) that McColl JA's decision, not being one of the Court of Appeal in the exercise of appellate jurisdiction, was not binding, and declined to follow it, on the basis that an interest on costs order under CPA, s 101(4) fell within the meaning of an order "as to costs" within CPA, s 98(3) and could be made after the conclusion of proceedings (at [81]-[87]). In Zepinic v Chateau Constructions (Australia) Ltd (No 2) [2014] NSWCA 99, the Court of Appeal noted, but did not need to resolve, the controversy (at [6]). 30CPA, s 101 provides as follows: 101 Interest after judgment (cf Act No 52 1970, section 95; Act No 9 1973, section 85; Act No 11 1970, section 39) (1) Unless the court orders otherwise, interest is payable on so much of the amount of a judgment (exclusive of any order for costs) as is from time to time unpaid. (2) Interest under subsection (1) is to be calculated, at the prescribed rate or at such other rate as the court may order, as from: (a) the date on which the judgment takes effect, or (b) such later date as the court may order. (3) Despite subsection (1), interest is not payable on the amount of a judgment if the amount is paid in full within 28 days after the date on which the judgment takes effect, unless the court orders to the contrary. (4) The court may order that interest is to be paid on any amount payable under an order for the payment of costs. (5) Interest under subsection (4) is to be calculated, at the prescribed rate or at such other rate as the court may order, as from: (a) the date or dates on which the costs concerned were paid, or (b) such later date as the court may order. (6) This section does not authorise the giving of interest on any interest payable under this section. (7) In this section, a reference to the prescribed rate of interest is a reference to the rate of interest prescribed by the uniform rules for the purposes of this section. 31The CPA and the UCPR contain no express provision as to when an application for an order under s 101(4) may be made. Much of McColl JA's reasoning in Zepinic is directed to explaining why the date of registering the certificate of assessment as a judgment is not the critical date. For reasons that appear below, I respectfully agree with her Honour that the date of registration of the deemed judgment on the certificate of assessment cannot be the critical date by which an application for an interest on costs order must be made, and that the earlier cases which suggested that that was the critical date [Timms v Commonwealth Bank of Australia (No 3) [2004] NSWCA 25, [11] (Beazley JA); Seiwa Australia Pty Ltd v Seeto Financial Services Pty Ltd (No 2) [2010] NSWSC 118 (Harrison J); Lucantonio v Kleinert (Costs) [2011] NSWSC 1642, [26] (Brereton J)] are, to that extent, incorrect [see also Short v Crawley, [76]]. But it does not follow that the date of the relevant costs order must be the critical date. 32The essence of McColl JA's reasons for holding that the relevant costs order provides the critical date was as follows: 82 However the interest order is made in respect of "an order for the payment for costs": s 101(4). Just as a costs order must be sought at the time of judgment, or within any time limited by UCPR 36.16, so, too, in my view must an interest on costs order. That conclusion which accords Handley AJA's view in Drummond (No 2) and, subject to what I have said, Beazley JA's view in Timms, is consistent with the principle of finality of judgments: see D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1 (at [34]) per Gleeson CJ, Gummow, Hayne and Heydon JJ). 33At the core of those reasons, and of the view that the critical date is that of the relevant costs order, is the finality principle, which finds expression in several ways: that the final judgment brings the proceedings to an end, so that there remains on foot no proceeding in which an interest on costs order could thereafter be made; that the court is functus officio, having completed its functions; or that the claim for interest has merged in the judgment on the claim for costs. What I have called "the finality principle" was stated by Barwick CJ in Bailey v Marinoff (1970) 125 CLR 529, in the following terms (at 530): Once an order disposing of a proceeding has been perfected by being drawn up as the record of a court, that proceeding apart from any specific and relevant statutory provision is at an end in that court and is in its substance, in my opinion, beyond recall by that court. It would, in my opinion, not promote the due administration of the law or the promotion of justice for a court to have a power to reinstate a proceeding of which it has finally disposed. 34Thus in any event, the rule is conditioned on "final disposal" of the proceedings, and is subject to statutory provision to the contrary. Moreover, Bailey v Marinoff admits that a court can, even after final judgment and absent statutory authority, vary its orders in a manner that does not amount to getting rid of "the operative and substantive part of its judgment" [at 532 (Menzies J); 535 (Walsh J); see also Thynne v Thynne [1955] P 272, 296, 301, 314, 315]. 35One element of McColl JA's reasoning is that a relevant costs order must itself be made not later than the final judgment disposing of the proceedings. Generally speaking, unless the question of costs has been dealt with, explicitly or implicitly, in the final judgment, a costs order does not involve any variation of or attack on the final substantive judgment. Accordingly, the finality principle is not offended by subsequently entertaining and dealing with an application for costs because it does not involve impugning "the operative and substantive part" of the judgment. In NSW Insurance Ministerial Corporation v Edkins (1998) 45 NSWLR 8, the Court of Appeal held that a judge was not functus officio after giving judgment and making costs orders if the duties in the case were not otherwise completed (even though the judge was not then aware of it), and that in circumstances where there was a costs argument still to be heard - although it had not until that point been made - he was not functus officio and was entitled to entertain and deal with an application for a special costs order made immediate following the delivery of judgment. While that result could be supported as a variation to the order made on application before it was entered, under the then equivalent of UCPR r 36.16, that is not how the Court of Appeal put it (at 12E): Also in my opinion there is no merit in the argument concerning the judge being functus officio at the point where he announced his verdicts and costs orders in the two actions. Although he did not know it at that moment, he had not then completed his duties in the cases, there was a costs argument still to be heard. He heard it immediately and acted quite properly and with proper authority in doing so. 36When that case was decided, the relevant predecessor of CPA, s 98 did not contain any provision equivalent to CPA, s 98(3), which was introduced in 2005, and expressly authorises the Court to make an order as to costs after the conclusion of proceedings: (3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings. 37However, provision to similar effect was made in the Rules [(NSW) Supreme Court Rules 1970, Pt 52, r 5; Pt 52A, r 5]. It may be allowed that s 98(3) is concerned with costs orders after the substantive decision has been given, and must be subject to finality from entry of costs orders already made, so that it would not not authorise re-opening a final costs order that has already been made [Roads and Traffic Authority of New South Wales, Council of the Shire of Evans and Pioneer Road Services Pty Ltd v Palmer (No 2) [2005] NSWCA 140, [17] (considering (former) SCR, Pt 52A r 5)]. But subject to that qualification it is, in the words used by Barwick CJ, a "specific and relevant statutory provision" to the contrary. 38Accordingly, an order for costs can be made after the conclusion of proceedings, so long as it does not impugn or alter a final costs order already made [see also Cotie v Cox [2006] NSWSC 859, [22]-[27] (Latham J)]. And if an order as to costs can be made after the conclusion of proceedings, it must follow that an order for interest on costs can be made after the conclusion of proceedings. This conclusion does not depend on the view, expressed by White J in Short v Crawley (at [81]-[83]), that an order for interest on costs is an order "as to costs" within s 98(3), with which I am inclined, respectfully, to disagree. CPA, Part 7 deals with Costs in Div 2 (which includes s 98), and Interest in Div 3 (which includes s 101). Section 98 appears under the heading, "Courts powers as to costs". It provides that costs are in the discretion of the court, that the court is empowered to determine by whom, and to what extent they are to be paid, and on what basis. Read as a whole, and in the context in which it appears, CPA, s 98 deals with allocation of responsibility for costs. Section 98(3) is concerned with when the Court may exercise those powers. This is confirmed by the opening words of s 98(4), "In particular ...", which then lists specific types of costs orders - and does not include an interest order. As has been explained above, the source of power to order interest on costs is not CPA, s 98, but CPA, s 101. In my view, an order "as to costs", for the purposes of s 98(3), is one allocating responsibility for costs, not one for interest [cf Lucantonio v Kleinert, [28]]. However, that does not mean that s 98(3) is irrelevant: because it authorises an order as to costs after the conclusion of proceedings, it necessarily indicates that an order for interest on costs must also be available after the conclusion of the proceedings. 39That, however, does not completely answer the proposition that a claim for interest on costs cannot be made after the relevant costs order because it merges in the relevant costs order, to which I now turn. 40Since the introduction of the costs assessment regime with effect from 1 July 1994, interest has been excluded from the scope of the assessment process and must be the subject of a separate judgment: in (NSW) Legal Profession Act 2005 ("LPA"), the concept of "costs" expressly excludes interest (s 4); and, by s 395, Division 11 (Costs Assessment) does not apply to an amount of interest ordered on an order for the payment of costs under CPA, s 101(4). This means that in order to recover under an interest on costs order, the party entitled must first obtain an assessment of the costs under the relevant costs order and register the certificate as a deemed judgment, which cannot include interest; and then separately obtain an enforceable judgment of the court for payment of the interest, which cannot be quantified until the costs under the relevant costs order have been assessed. Thus some application to the court - to quantify the interest - is inevitable, after the assessment process is complete. Although an "in principle" interest on costs order can be, and often is, made earlier, it is impossible to quantify the interest order so as to found an enforceable judgment for a sum of money until the assessment process is complete. In those circumstances, it is difficult to see why a preliminary application for an "in-principle" interest on costs order must be made at the same time as the relevant costs order. 41Moreover, because interest is excluded from the assessable costs, it can never be included in the certificate of assessment and consequent deemed judgment; it must always be the subject of a separate judgment. I therefore respectfully agree with White J, in Short v Crawley (at [73]) that a claim for interest on costs does not merge in the relevant costs order - not only because, as his Honour explained (at [72]), the former derives from CPA, s 101 while the latter derives from CPA, s 98, so that the claim for interest on costs is not "the very right or cause of action claimed or put in suit" as is determined by the relevant costs order - but also because, as explained above, the interest cannot be included in the certificate of assessment and subsequent deemed judgment, but must be the subject of a separate judgment. It is for those same reasons that I agree, with McColl JA, that the date of registration of a certificate of assessment of costs as a judgment cannot be the critical date for an interest on costs order. But the further consequence, as it seems to me, is that as the claim for interest results in a separate judgment from the relevant costs order, it cannot merge in the relevant costs order so as to come to an end when it is made. 42Prior to the replacement, with effect from 1 July 1994, of the former system of taxation with current system of assessment of costs, SCR, Pt 52 r 54A provided (in respect of proceedings commenced after 1 January 1984) as follows: 54A. Where the Court makes an order for the payment of the costs of a party and his costs are taxed, the taxing officer may exercise the powers of the Court under section 95(1) of the Act to make orders for interest to be payable: (a) at the rate prescribed by Part 40 rule 7(2) or ordered, otherwise than by the taxing officer, under section 95(1) of the Act, (b) on any amount paid before the conclusion of the taxation by the successful party to his solicitor for or on account of the costs to be payable, (c) as of the date on which the amount was paid. 43Under this rule, a taxing officer, exercising the delegated power of the court, could make an interest on costs order in the course of the taxation, which would typically be long after the relevant costs order was made. The rule treated an interest on costs order not as part of the exercise of the power of the court to make an order as to costs, but as a subsequent and separate exercise of a power to allow interest. 44This approach was not limited to the exercise by taxing officers of their delegated power under SCR, Pt 52 r 54A. Prior to 1 July 1994, it had become established (in the context of SCA, s 95 and LECA, s 69A, before the substantial re-enactment of SCA, s 95 as CPA, s 101), that an order for interest on costs could be made long after the relevant costs order, and that the Court did not become functus officio in that respect on the making of the relevant costs order. Thus in Fischer v David Syme, where the relevant costs order had been made on 11 May 1987, the interest on costs order was ultimately made on 21 December 1989, on a bill of costs filed on 6 October 1988, which was referred by the taxing officer to the Court on 15 August 1999. The question was specifically addressed by Bignold J in the Land and Environment Court in Carson v Minister Administering the Environmental Planning and Assessment Act 1979 (1994) 82 LGERA 179. His Honour held that the power conferred by s 69A was capable of being invoked, notwithstanding that the matter was not raised when the question of costs was debated and decided, for the following reasons: The Respondent submits that it is not now open to the Applicant to seek the Court to exercise the power because the time for seeking such relief was when the question of costs was debated and determined in 1990. On that occasion Hemmings J was not asked to exercise the power conferred by s69A. In deciding the question of costs in favour of the Applicant his Honour made, what the Respondent described, as "the normal costs order". The Respondent argued that if the Applicant sought (as he now seeks) a "special order" reflecting his claim to interest on costs and fees pre-paid by the Applicant to his Solicitor, he should have sought the special order from Hemmings J and not the normal order. The power to now make a special order, some four years after the costs order was made, is, according to the Respondent's argument, spent and exhausted. The Respondent submits that the Court is functus officio. It argues that there is no power to make a supplemental order because to do so would effectively set aside the normal costs order made by Hemmings J in circumstances where there is no enabling power so to do. The Respondent further submits that the express power to set aside or vary an order conferred by Pt13 r7 of the Rules is not relevantly attracted by the circumstances of the present case. In my judgment, none of these arguments should prevail. They are all self evidently highly technical and are lacking entirely in merit in the circumstances of this case, where it has been plain at all material times (ie before, during and after the taxation process) that the Applicant has been claiming (and the Respondent has been resisting) interest on costs. (I do not think it matters that the Applicant's claim was, until recent times, based upon SCR Pt52 r 54A rather than upon s 69A since, as I have already held, the power conferred by the section is sufficiently wide and flexible to encompass an order for interest to be payable from a date anterior to the date when the order for costs was made. Nor does it matter that the Applicant has been seeking relief from the Registrar in circumstances where the power is vested in the Court and is only exercisable by a Judge of the Court.) The only material time that the Applicant's claim to interest has apparently not been plain was when the question of costs was argued before Hemmings J leading to his costs order in favour of the Applicant on 25 July 1990. In my judgment it is not necessary for a party seeking an order under s 69A to apply for such relief at the same time when the question of costs is debated. An order under s69A is not a costs order. It is a separate order that may be made only where a costs order has been made. Whereas, it would be open to a party to seek relief under s 69A contingently upon a costs order being made it is also open (and I would have thought more usual) for a party who has obtained a costs order, to thereafter seek relief under s 69A. Accordingly, there is simply no question of an order under s69A (if made in the present case) having the effect of "setting aside or varying" the costs order made in the present case. However, even if an order under s69A had the effect that the Respondent suggests, the express power to vary conferred by Pt13 r 7(f) would be made available simply by the consent of the Applicant (in whose favour the costs order was made). 45His Honour's conclusion was not doubted in the Court of Appeal. Kirby P noted that the power of the court to make an interest on costs order years after the relevant costs order was made, was no longer in contest (Minister v Carson, 346): In answer to the argument that the Land and Environment Court's power to make a special order four years after the principal costs order was made, was "spent and exhausted", Bignold J determined that the power "to otherwise order", conferred by s 69A, did not need to be exercised at the time the initial order for costs was made. He held that s 69A was "sufficiently wide and flexible to encompass an order for interest to be payable from a date anterior to the date when the order for costs was made". In support of this interpretation, he referred to Fischer v David Syme & Co Ltd (1989) 18 NSWLR 606 at 616 and Government Insurance Office of New South Wales v Healy (No 2) (1991) 22 NSWLR 380 at 387. In this Court, the Minister accepted that determination. The power of the Land and Environment Court to award interest on costs, and of a judge of the court to do so years after the initial cost order was made, were not in contest in this appeal. 46Young AJA also noted, without demur, that the functus officio question was no longer in issue (at 355A). 47Thus, as it seems to me, prior to the commencement of the costs assessment scheme, it was established - both by the provisions of SCR, Pt 52 r 54A, and by the course of the judicial decisions to which I have referred - that the power to make orders in respect of interest on costs under SCA, s 95 did not have to be exercised at the time of making the relevant costs order; that neither an order finally disposing of the substance of the proceedings, nor the making of the relevant costs order, rendered a judge functus officio so as to preclude the later making of an order for interest on costs; and that the claim for interest on costs did not merge in the relevant costs order. While the amendments associated with the introduction of the costs assessment scheme with effect from 1 July 1994 had the consequence that thereafter only the Court itself could make an interest on costs order (because the power formerly delegated to taxing officers was not given to costs assessors), there is no basis for supposing that those amendments were intended to confine the ability of the court to make an order for interest on costs to the time of the relevant costs order, when it had not previously been so confined. Moreover, the amendments made it clearer than before that there could be no merger, because whereas, while a taxing officer had power to award interest, the interest could be included in the same certificate as the costs; under the assessment scheme, where assessors have no such power, there must be separate judgments for costs and for interest. CPA, s 101 should be regarded as having assumed the settled position that, under its predecessor (and its equivalent in LECA, s 69A), orders for interest on costs did not have to be made at the time of the relevant costs order, but could be sought and made subsequently. 48There are additional reasons supporting the conclusion that an order for interest on costs can be made after the costs order to which it relates. 49First, contextually and historically, the power to order interest on costs is sourced in the statutory provision for the (automatic) accrual of interest in respect of judgment debts, and the power to "otherwise order". It is difficult to see why the power to "otherwise order" under CLPA, s 143A, SCA, s 95(1) and (3), and CPA, s 101(1) and (3), should be exercisable only when the judgment is given, and not subsequently. 50Secondly, there is a significant distinction between s 101(4) and s 100(1), which authorises the inclusion in a judgment of pre-judgment interest in the following terms: 100 Interest up to judgment (cf Act No 52 1970, section 94; Act No 9 1973, section 83A; Act No 11 1970, section 39A) (1) In proceedings for the recovery of money (including any debt or damages or the value of any goods), the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit: (a) on the whole or any part of the money, and (b) for the whole or any part of the period from the time the cause of action arose until the time the judgment takes effect. 51Unlike s 100(1), s 101(4) contains no requirement that the interest be "included" in the costs order. The former provision contains a requirement that the interest be part of the original judgment [Owston v Bank of New South Wales (1877) Knox 90; Bank of New South Wales v Owston (1879) 4 App Cas 270], whereas the latter does not. 52Finally, in addition to Fischer v David Syme and Minister v Carson, which predate the 1994 amendments, the clear predominance of later judicial authority since is to like effect: see Roads and Traffic Authority v Cremona [No 3] [2005] NSWCA 13, [20] (Sheller JA); Simmons v Colley Cotton Marketing Pty Ltd [2007] NSWSC 1092, [13] (Bergin J: s 101(4) contemplates that an order for interest may be made after entry of orders for costs); Siewa Australia Pty Ltd v Seeto Financial Services Pty Ltd (No 2) (Harrison J: judge does not become functus officio in this respect by making final costs order); Lucantonio v Kleinert, [26]; Short v Crawley; Wardy v Wardy, [6]. The contrary position was expressed, obiter, by Handley JA, in a dissenting judgment, in Drummond & Rosen Pty Ltd v Easey (No 2) [2009] NSWSC 331, [49] (the majority did not consider this point); and by McColl JA in Zepinic. 53The foregoing analysis results in the following conclusions. As an order for interest on costs derives from a different statutory source than the costs order, does not impugn the operative and substantive costs order, and results in a separate judgment from the judgment under the costs order, a claim for interest on costs does not merge in the relevant costs order, and a judge does not become functus officio in that respect on making the relevant costs order. Prior to the commencement of the costs assessment regime in 1994, it was accepted that an order for interest on costs did not have to be sought when the relevant costs order was made, but could be made subsequently; the introduction of the costs assessment scheme, while removing the power from taxing officers, was not intended to affect this; and the substantial re-enactment of SCA, s 95 as CPA, s 101 assumed the established position. The predominance of judicial authority also favours that view. 54In my judgment, therefore, if there is a time limit for seeking an order under CPA, s 101(4), it is not the making of the relevant costs order (or 14 days thereafter), and no viable alternative has been identified, let alone suggested to be applicable in this case. (Arguably, the (NSW) Limitation Act 1969 may provide one, by s 14(1)(d) or s 17, and the Court might decline as a matter of discretion to entertain an unduly belated application [cf Cotie v Cox, [25]-[26]], but it is unnecessary to explore those possibilities further). 55Moreover, in the circumstances of the present case, it cannot even be said that the court has made orders finally disposing of the proceedings, as it remains seized of the inquiries and accounts ordered pursuant to the substantive proceedings. 56Accordingly, the plaintiff's application for an interest on costs order is not out of time.

Requirement for evidence 57In Drummond and Rosen, Macfarlan JA, with whom Tobias JA agreed, said that it was not necessary for there to be evidence of the date or dates on which the costs concerned were paid, if an order for interest under s 101(4) were to be made, and that in the usual case the court did not need to know when the costs were paid (at [3]): 3 The matter in relation to which I respectfully disagree with his Honour is as to the making of an order for payment of interest on costs. His Honour has quoted the terms of s 101(4) and (5) of the Civil Procedure Act 2005. In my view it is unnecessary for there to be evidence of the date or dates on which the costs concerned were paid for an order for the payment of interest to be made under subsection (4). Indeed, such evidence would often not be particularly useful. If the Court does not choose to order that interest be payable from a later date, interest will run, if an order is made under subsection (4), from the date or dates on which the costs concerned were paid. If the costs were paid promptly, interest will run from an earlier date than that from which it would run if there was delay in payment. That is an appropriate result as the purpose of an order for payment of interest is essentially compensatory. I do not see why in the usual case the Court needs to know when the costs were paid. 58His Honour added (at [4]): In the absence of any countervailing discretionary factor (of which there appear to be none in the present case), it is appropriate that an order for interest on costs be made to compensate the party having the benefit of a costs order for being out of pocket in respect of relevant costs which it has paid [Lahoud v Lahoud [2006] NSWSC 126 at [82-3] per Campbell J]. 59The defendants submit, however, that there must be evidence that costs were in fact paid, and, at least in this case, when they were paid in what amount and by whom, as otherwise the Court would impose a liability for interest without any evidentiary basis. The defendants invoke Illawarra Hotel Company Pty Ltd v Walton Construction Pty Ltd (No 2) [2013] NSWCA 211; (2013) NSWLR 436, in particular: 36 Illawarra nevertheless recognises that the power to award interest on costs is discretionary and that some positive case must be made in support of the application. It says, in that regard, that Illawarra has paid out a very large sum since the commencement of the litigation in 2008 and that that money could otherwise have been put to profitable use. Reference is made to an affidavit of Illawarra's solicitor referring to sums paid by Illawarra to his firm. Illawarra further says that Walton has effectively had the benefit of not having paid that money. 37 Walton submits that the question of interest on costs cannot be determined without an exhaustive consideration of the circumstances that caused the proceedings to be protracted by the serving of evidence on unsuccessful issues, futile amendments to pleadings, issues not pursued at trial and matters relevant to McDougall J's observation concerning "the evident animosity between the parties and the lengths to which each has gone to buttress its case". 38 That submission must be accepted. A party who contends that there should be an order for interest on costs must do more than point to the fact that the proceedings were protracted and that it had to outlay moneys on its own costs over a long period. The reasons for the protracted nature of the proceedings are of obvious relevance. To take a hypothetical example, one can imagine a case in which one party deliberately seeks to prolong proceedings with an eye to some collateral benefit of its own for which it is quite happy to pay the price of being out of the money it progressively outlays for costs. That hypothetical case can be contrasted with another in which a party has made strenuous effort to expedite matters and to avoid all delay with a view to the earliest possible trial but has been frustrated in those efforts by actions of the other party. A middle course is where each party acts with reasonable diligence and dispatch but the nature of the proceedings and their subject matter is such as to prolong them. A court might well take different attitudes to applications for interest on costs in these hypothetical cases. 39 This litigation was, of its nature, time-consuming and exacting. Building cases often descend into what, to the outside observer, seems to be tedious analysis of a vast myriad of minutiae. In the absence of some sufficiently clear explanation of the reasons why this litigation proceeded as it did, in a timing sense, there would be no sound basis for exercise of the discretion concerning interest on costs, even if it were now exercisable by this Court in relation to the costs in the court below. 60In Illawarra Hotel, the Court did not refer to Drummond and Rosen. The apparent conflict between Drummond and Rosen and Illawarra Hotel has been noted, but not resolved, in Zepinic v Chateau Constructions (Aust) Ltd (No 2) [2014] NSWCA 99, [43], [44]; DSG Holdings Australia Pty Ltd v Helenic Pty Ltd (No 2) [2014] NSWCA 142, [5], [6]; and Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd [2014] NSWCA 158, [404], where Gleeson JA said: 403 No issue was raised on appeal as to the principles applied by the primary judge at [49] Judgment No 3. The payment of interest is intended to be compensatory, on the basis that the person entitled to costs has been wrongly required to spend money on litigation to enforce established rights: Robb Evans of Robb Evans & Associates v European Bank Ltd (No 2) [2009] NSWCA 170 as [44] per Basten JA (Campbell JA agreeing). Thus in the absence of any countervailing discretionary factor, it is appropriate that an order for interest on costs be made to compensate the party having the benefit of a costs order for being out of pocket in respect of relevant costs which it had paid. There is no requirement to establish that the circumstances of the case are out of the ordinary: Drummond and Rosen Pty Ltd v Easey & Ors (No 2) [2009] NSWCA 331 at [4] per Macfarlan JA (Tobias JA agreeing) citing Lahoud v Lahoud [2006] NSWCA 126 at [82]-[83] per Campbell J. 404 In this case, there was evidence before the primary judge by way of affidavit from Mrs Vicki Lovick, the administration officer of the respondents, of the amounts paid, and the dates of payment of legal costs totalling $636,558.27 as at 21 June 2012 (Black 936M). Thus no issue arises on the present appeal as to whether a special order for interest on costs can and should be made in the absence of such evidence: Drummond and Rosen Pty Ltd v Easey & Ors (No 2) at [3] per Macfarlan JA (Tobias JA agreeing); contra Handley AJA at [49]; cf Illawarra Hotel Co Pty Ltd v Walton Construction Pty Ltd (No 2) [2013] NSWCA 211; 84 NSWLR 436 at [36] per Meagher, Barrett and Ward JJA. 61In The Owners - Strata Plan No 61162 v Lipman [2014] NSWSC 622, McDougall J did not think it open to deal with the matter on the basis that there was no binding authority and concluded that he was bound by Illawarra Hotel, although his Honour observed that if the matter were to be decided on the basis articulated by Macfarlan JA in Drummond and Rosen (and, his Honour added, similar views had been expressed on numerous prior occasions), the particular case was one in which it would still have been appropriate for there to be some explanation of what appeared to be extraordinary delay (at [266]-[270]). 62Unlike McDougall J, I do not consider that I should regard myself as bound by the decision in Illawarra Hotel. First, the Court of Appeal's observations on this issue were obiter, the ratio of the decision being (at [33]-[34]) that interest on costs was not part of the appeal. Secondly, their persuasive force as obiter is diminished by the circumstance that they conflict with an earlier decision of the Court of Appeal which has been applied on many occasions, never expressly overruled, and not referred to in Illawarra Hotel. Thirdly, the Court of Appeal has had at least three opportunities to resolve the issue but has deliberately left it open. Fourthly, the observations of Gleeson JA in Doppstadt Australia Pty Ltd v Lovick (at [403]), which post-date the judgment of McDougall J, tend to support the approach of Macfarlan JA in Drummond and Rosen. Fifthly, as White J has observed, the Court of Appeal's observations in Illawarra Hotel were made in the context that no application for interest had been made to the primary judge [Wardy v Wardy, [10]]. 63The view that evidence that costs have been paid, and/or when they were paid, is not a necessary precondition of an interest on costs order, is supported by a number of considerations. The first is the terms of s 101(5), which provides that if the Court makes an order under s 101(4), then interest is payable at the prescribed rate from the date or dates on which the costs concerned were paid (unless the court specifies some other rate and/or some other date). This provides a default position, which renders it completely unnecessary to prove when the costs were paid, until it comes to working out the quantum of the interest. If an order is made under s 101(4), then absent some special order under s 101(5) the costs will attract interest only to the extent that they have been paid, and from when they were paid. A party seeking to have interest run from a later date might need to adduce evidence to show why that should be so. 64The second is the history, referred to above, which shows that the origin of s 101(5) was in the power to "otherwise order" so that the default rules about interest would not apply; coupled with the compensatory purpose of the power conferred by s 101(4). It is now clearly established that, while neither the incipitur nor the allocatur rule may do perfect justice in every case, the incipitur rule is to be preferred as the default position (while the power to "otherwise order" enables the court to respond to the particular requirements of justice in the individual case [Tarlinton; Hunt v R M Douglas; Fischer v David Syme; Minister v Carson]. The essential reason for this is one of fairness, because otherwise, the sum of money that represents the costs is "fructifying in the wrong pocket" [Newton v Grand Junction Railway Co (1846) 16 M&W 139, 141; Tarlinton, 7-8; Minister v Carson, 352G-353F, 359D-361C]. Evidence is not required to make good the proposition that the money is fructifying in the wrong pocket after the plaintiff has paid costs which it is later determined should be recoverable from the defendant. Nor is the force of the proposition reduced by the protraction of the proceedings, or the reasons for which they are protracted. There is no requirement to demonstrate special circumstances in order to obtain an interest on costs order [Gilfillan v Australian Securities and Investments Commission (No 2) [2013] NSWCA 143; (2013) 94 ACSR 543, 549 [33]; Lahoud v Lahoud, [82]; Simmons v Colly Cotton Marketing Pty Limited, [14]]; and there is no need to explain why the proceedings have taken the course they have, at least unless and until some "countervailing discretionary consideration" is raised. 65The third is that, because of the terms of s 101(5), an interest on costs order has inbuilt safeguards. The default provisions of s 101(5), as well as the usual form of order modelled on Lahoud v Lahoud, reflects the compensatory nature of the power, and allows recovery of interest only to the extent that (1) the Court has determined that costs should be paid; (2) an assessor has allowed those costs; and (3) for the period from when the costs were paid by the party entitled. In view of those provisions, a court does not need to know whether the costs have been paid, or when they were paid. Thus the defendants' submission, that without evidence the court would be imposing a liability with no evidentiary basis for it, is incorrect. 66For those reasons, in my view, conformably with what Macfarlan JA said in Drummond and Rosen, a party who obtains a costs order will ordinarily - in the absence of any countervailing discretionary factor - also obtain an order for interest on those costs, if it seeks one, and evidence of payment of the costs is not required; nor is evidence explaining the course of the proceedings [see also Lahoud v Lahoud, [82]-[83] (Campbell J); Hexiva Pty Ltd v Lederer (Costs) [2006] NSWSC 1259, [21]; Wood v Inglis [2010] NSWSC 749, [9]-[13]; Lucantonio v Kleinert, [25]].

Discretionary considerations 67The foregoing discussion about the supposed requirement for evidence largely also addresses the argument that an order for interest on costs should be refused on discretionary grounds. Interest on costs, like prejudgment interest, is compensatory, not punitive. It compensates the party entitled for being out of money for the time it was held out of that money, and deprives the party liable of the benefit of having held the funds when it ought not have done so: absent such an order, the sum of money in question fructifies in the wrong pocket. In the absence of countervailing factors, it is ordinarily appropriate that an order for interest on costs be made, so as to compensate the party entitled for being out of pocket in respect of the costs that party has paid [Drummond and Rosen, [4]; Gilfillan v ASIC, [33]; Simmons v Colly Cotton, [15]; Lucantonio v Kleinert, [25]; Wood v Inglis, [9]-[14]; Tomasetti v Brailey [2012] NSWCA 399; (2012) 275 FLR 248, [164]; Lahoud v Lahoud, [83]]. 68While the power to make an interest on costs order is discretionary and interest may be declined if there are "countervailing factors", as with prejudgment interest under s 100(1), the circumstances in which a claim for interest can be refused are rare. The analogous position with respect to pre-judgment interest on debt or damages under CPA, s 100(1) was explained by the Court of Appeal in Falkner v Bourke (1990) 19 NSWLR 574 (at 576B): Early decisions in this Court, both under the Supreme Court Act and the District Court Act in regard to the awarding of interest, referred to the discretionary aspect of the power granted by the statutes. However, as cases have accumulated it has become clear that the circumstances in which a claim for interest can be refused are rare. The general rule was recognised as long ago as 1983 in a decision of this Court, Homeowners Insurance Pty Ltd v Job (1983) 2 ANZ Ins Cas 60-535. It was recognised there by Glass JA (at 78,105-78,106) that interest is almost invariably to be allowed when claimed and the Court's decision in that case went upon that basis, that being another case where a District Court judge had refused an award of interest for a supposedly discretionary reason, which was not really available in relation to the exercise of the statutory power. Although sometimes a countervailing factor may be self evident (as in Owners - Strata Plan No 61162 v Lipman), ordinarily the party raising it will bear at least an evidentiary onus of raising and proving it. 69In particular, delay - and responsibility for delay - is usually immaterial, because the money is still fructifying in the wrong pocket [Tomasetti v Brailey, [164]]. If a defendant could show that, during a period of delay responsibility for which could be sheeted home to the plaintiff, it was earning interest at a lower rate than the prescribed rate that it would be required to pay the plaintiff, that might well support the Court making an "otherwise order" by way of varying the rate of interest payable - but it would not support making no award of interest at all. 70The defendants submitted that as a matter of discretion interest should be refused because the protraction of the proceedings was attributable to the plaintiffs, in that they served evidence on issues on which they were unsuccessful, made amendments to pleadings to raise issues on which they failed, abandoned a number of issues at trial, and "given the evident animosity between the parties, the lengths to which the plaintiff has gone to buttress his case". 71There are three answers to this argument. The first is that allowance has already been made for the plaintiff's failure on a number of issues, and pursuit of issues on which he was unsuccessful, and any excess of zeal in the pursuit of his case, in the determination that the defendants should pay only 62.5% of his costs [Grace v Grace (No 4)]. The second is that the protraction of the proceedings had many causes - some associated with the plaintiff, some with the defendants, and some with the court - and was by no means exclusively the responsibility of the plaintiff. The third is that even if the protraction of the proceedings was substantially the responsibility of the plaintiff, that does not mean that the defendants should retain the benefit of the money fructifying in their pockets in the meantime. That is because interest does no more than reflect the time value of money, and that the party liable has held the money and derived the benefit of it while the party entitled has been out of pocket in the meantime. Whatever the extent of the plaintiff's responsibility for delay, the defendants enjoyed the benefit of the money of which the plaintiff was out of pocket in the interim. As explained above, the plaintiff's responsibility for the delay does not somehow make it just that the defendants should retain that benefit. 72As will usually be the case, the compensatory purpose of the power is sufficient to warrant making an interest on costs order, and there are no sufficient countervailing factors.

Conclusion 73My conclusions may be summarised as follows. 74For the purposes of FLA, s 117B, an order for the payment of money includes an order as to costs under s 117(2A), even if those costs have not yet been quantified. Prima facie, the defendants would be liable, pursuant to s 117B(1), to pay interest on so much of the costs of these proceedings that the defendants have been ordered to pay as relate to the proceedings under the FLA, from the date of the relevant costs order (namely 28 March 2013). However, s 117B(2)(b) empowers the Court to order that interest be payable from an earlier date. This provides the power to make an order for interest on costs from the date they were paid, in respect of the costs of the proceedings insofar as they relate to proceedings under the FLA, while CPA, s 101(4), confers power to make such an order in respect of the balance of the proceedings. The Court therefore has power to make such an order, both in respect of any order made as to the costs of the family law proceedings (under FLA, s 117B(2)(b)), and in respect of any order as to the costs of the non-family law proceedings (under CPA, s 101(4)). It follows that no question of inconsistency between the two provisions arises, and I am relieved of the need to address whether s 101(4) would be made applicable to proceedings in this Court under the FLA by the Cross-Vesting Act or the Judiciary Act. 75Because an order for interest on costs derives from a different statutory source than the costs order, does not impugn the operative and substantive costs order, and results in a separate judgment from the judgment under the costs order, a claim for interest on costs does not merge in the relevant costs order, and a judge does not become functus officio in that respect on making the relevant costs order. Prior to the commencement of the costs assessment regime in 1994, it was accepted that an order for interest on costs did not have to be made when the relevant costs order was made; the introduction of the costs assessment scheme, while removing the power from taxing officers, was not intended to affect this; and the substantial re-enactment of SCA, s 95 as CPA, s 101, assumed the previously established position. The predominance of later judicial authority also favours that view. Thus, if there is a time limit for seeking an order under CPA, s 101(4), it is not the making of the relevant costs order (or 14 days thereafter), and no viable alternative has been suggested to be applicable in this case. Moreover, in the circumstances of the present case, it cannot be said that the court has made orders finally disposing of the proceedings, as it remains seized of the inquiries and accounts ordered pursuant to the substantive judgment. Accordingly, the plaintiff's application for an interest on costs order is not out of time. 76A party who obtains a costs order will ordinarily - in the absence of any countervailing discretionary factor - also obtain an order for interest on those costs, if it seeks one, and evidence of payment of the costs, and/or explaining the course of the proceedings, is not a pre-requisite. While the power to make an interest on costs order is discretionary and interest may be declined if there are "countervailing factors", as with prejudgment interest under CPA, s 100(1), the circumstances in which a claim for interest can be refused are rare. In this case, the compensatory purpose of the power warrants making an interest on costs order, and there are no sufficient countervailing factors. 77In order to avoid unnecessary complications, I will make a single order that conforms to the requirements of both statutory sources, and specifies a single interest rate. As the proceedings have been in this Court, and any enforcement process will issue out of this court, and on balance the "centre of gravity" of the proceedings has been the non-FLA rather than the FLA proceedings, I will select the rate applicable under the CPA, s 101. As the plaintiff has entirely succeeded on this application, it is appropriate that the defendants should pay his costs, and I propose to so order - pursuant to FLA, s 117(2), in respect of so much of the application as was under the FLA, and pursuant to CPA, s 98(1), in respect of the balance of the application. 78Accordingly, the Court orders that: (1)Pursuant to CPA, s 101(4) and (5), and pursuant to FLA, s 117B(2), interest is to be paid on the amount payable under order (1) made on 28 March 2013, and on the amount payable under order (4) below, at the rate prescribed by the UCPR for the purposes of CPA, s 101, from the date or dates on which the costs concerned were paid by the plaintiff, until payment by the first and second defendants of the amounts so payable. (2)For the purposes of order (1), the plaintiff is to be taken to have paid the costs concerned on the date of each payment actually made by him for or on account of costs of these proceedings, but only to the extent of the proportion of each such payment that the total amount of costs allowed on assessment under the said order bears to the total amount of costs which the plaintiff has paid or is liable to pay as between practitioner and client in connection with these proceedings. (3)There be liberty to apply in the event of any difficulty arising in the implementation of this order. (4)Pursuant to FLA, s 117(2), and pursuant to CPA, s 98(1), the first and second defendants pay the plaintiff's costs of the interlocutory process filed 17 March 2014.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 September 2014