Procedure - Costs - Recovery of costs - Interlocutory proceedings - Where costs awarded to one party - Usual rule that not payable forthwith but "in any event" - Departure from usual rule - No threshold test of exceptional circumstances - Order made otherwise where interests of justice require it - Whether costs should be payable forthwith.

Bull Nominees Pty Ltd v McElwee [1997] TASSC 148; (1997) 7 Tas R 339; McKellar v Container Terminal Management Services Ltd [1999] FCA 1639, Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 considered.

Spotwire Pty Ltd v Visa International Service Association (No 2) [2004] FCA 571, applied.

Judgment Number: [2009] TASSC 103

GUNNS LIMITED (ACN 009 478 148) TASMANIAN PULP & FOREST HOLDINGS LTD (ACN 009 488 733) GUNNS FOREST PRODUCTS PTY LTD (ACN 004 208 904) v SYED ALISHAH, WARRICK JORDAN, PAUL ERIC KIMBELL, NATHAN HARRIS, LEE ANTHONY SARGENT, BRETT THOMPSON, NISHANT ALLAN DANT, URSULA DUBIEL MAJEWSKI, CHRISTOPHER JOSEPH MILLS, BENJAMIN HUW SHARP, MIRANDA KYMALEE GIBSON, WILLIAM HUGH MOONEY, RACHEL ALISON MARGARET LEWANDOWSKY

1 The present issue is the question of costs of an interlocutory application which I determined on 11 June 2009; [2009] TASSC 45. The plaintiffs' action against the defendants is one for damages in trespass. It arises from forest protest activities carried out by the defendants on, it is alleged, land occupied by the plaintiffs. The damages sought include aggravated and exemplary damages. On 9 February 2009, the plaintiffs filed an application to strike out a substantive part of the defence filed on behalf of all defendants, and to strike out, or have excluded from the action, a counterclaim brought by the second to the eleventh and the thirteenth defendants.

2 The aspect of the defence which was contentious was par12. As to the whole of the plaintiffs' claims, "including damages", it was pleaded that the relevant acts of the defendants were engaged in by them "in the course of communicating information about government and political matters and was reasonable in all the circumstances by reason of which the conduct was immune from action and/or privileged".

3 On the hearing of the interlocutory application, the plaintiffs submitted that the defence was not a reasonable answer and was untenable. This was on the basis that the implied constitutional freedom raised, was a freedom of communication and not a freedom to communicate, and that the implied freedom did not create personal rights; in particular, it did not create a right to trespass for the purposes of communication on a political matter. It emerged during the defendants' submissions that the plea was intended only to operate in relation to the claim for aggravated and exemplary damages.

4 The counterclaim was brought pursuant to the Trade Practices Act 1974 (Cth), s52. It concerned representations alleged to have been made by the first plaintiff, and an individual who was made a defendant to the counterclaim, in relation to the intention of the first plaintiff not to use old growth trees or trees from old growth forests, in a proposed pulp mill at Bell Bay. Only injunctive relief was sought. In support of their application, the plaintiffs relied on serious pleading deficiencies and the inconvenience of having the counterclaim in the action.

5 In relation to the defence, the outcome was expressed in par24 of my reasons for judgment as follows:

"The result of all of this is as follows. In my view, the present terms of par12 dictate that it be struck out, but leave should be granted to file and serve an amended defence pleading the immunity arising from the implied freedom of communication as an answer to the plaintiffs' claims for aggravated and exemplary damages. In relation to striking out par12, as presently drafted it raises the implied freedom as an 'answer to the whole of the Plaintiffs' Claims, including damages ...'. That pleading is said to be not what was intended, and accordingly it is inaccurate and misleading. Whilst there are some unusual features about the way in which the statement of claim is drafted, I do not accept that, because of the form of the pleading to which it responds, it was necessary to plead par12 as it is. I take the view that because of the function of particulars, it should be the whole of the paragraph which is struck out, rather than striking out the substantive part, leaving the particulars in place. I am conscious that the particulars provided under par12 were provided in relation to government and political matters about which the defendants say they were communicating when engaged in doing the acts alleged in par4(d) - (g) of the statement of claim. No doubt a re-pleaded defence will again raise the immunity in reliance on the same communications, but I think striking out the whole of the paragraph is a more orderly way of going about things."

6 As to the counterclaim, an amended version was delivered after I reserved my decision. This remedied the pleading defects but left the inconvenience issue. The amended pleading prompted the plaintiffs to make a further application as to the counterclaim, in similar terms to the first. That was adjourned sine die at a directions hearing, the end result being that I was left to resolve the inconvenience issue as previously argued. I determined that it could not be conveniently disposed of in the plaintiffs' action, and ought be excluded from it. In summary, I took the view that there was little, if anything, in common in terms of factual and legal issues between the claim and the counterclaim. On 11 June 2009, I made the following orders:

• paragraph 12 of the defendants' defence dated 2 March 2009 be struck out;

• the defendants have leave to file and serve, within 14 days, an amended defence pleading the immunity arising from the implied freedom of communication as an answer to the plaintiffs' claims for aggravated and exemplary damages;

• the counterclaim of the 2nd - 11th and 13th defendants be excluded from the proceeding and disposed of as a separate action;

• those proceedings be listed before the associate judge for directions.

7 In broad terms, the parties are agreed that the defendants should pay the plaintiffs' costs of the interlocutory application. The only issue is whether the order should be in terms that those costs are payable "in any event". There is no dispute that such an order would mean that the plaintiffs get their costs irrespective of the outcome, but the entitlement to tax those costs does not arise until after the resolution of the action; Bull Nominees Pty Ltd v McElwee [1997] TASSC 148; (1997) 7 Tas R 339, a case to which I will return. The plaintiffs submit that they should be entitled to recover their costs immediately. The defendants say that there are no exceptional circumstances which would justify that order. The plaintiffs do not dispute the proposition that as a general rule, such costs should be made payable in any event, unless good reason is shown for ordering otherwise. (For the sake of convenience, in these reasons I will use the word "costs" to denote costs of interlocutory proceedings, unless otherwise stated.) The plaintiffs do however, argue that the circumstances in which it is appropriate to otherwise order need not be exceptional. On its face, the submission is contrary to the proposition endorsed in the Bull Nominees case.

8 The plaintiffs submit that the requirement for exceptional circumstances was rejected by Weinberg J in McKellar v Container Terminal Management Services Ltd [1999] FCA 1639. The passage relied on appears at [41]:

"I should say that I agree entirely with the observation of Lindgren J in Allstate Life Insurance Co v ANZ Banking Group Ltd [1995] FCA 660 ... that the power to order that costs be paid forthwith should perhaps be used less sparingly than it has been in the past. That is particularly so in lengthy and complex cases where substantial costs have been thrown away as a result of ill-considered pleadings being drawn. Such costs should be capable of being recovered without the innocent party having to wait, possibly for years, for that to occur." [Emphasis added]

9 I think that the premises upon which the argument is based need to be examined. The question involves a consideration of what is meant by the use of the expression "exceptional circumstances" or similar, and that the real point is whether the law, at least in this State, was ever correctly expressed as requiring there to be exceptional circumstances before a court would order that costs be payable forthwith. The issue is whether the use of the expression is intended to truly establish a fetter by way of a threshold test, or whether it is part of the statement of the rule, in the sense that it simply conveys the notion that something out of the ordinary must exist in order to justify ordering otherwise; that is, there is something which makes it just as between the parties to order otherwise.

10 By way of illustration, there are areas in which the exercise of a particular discretion is fettered by the imposition of a requirement for exceptional circumstances, where the power is not expressly fettered by any such considerations. An applicant for a stay of proceedings or bail, pending a special leave application to the High Court, needs to specifically establish exceptional circumstances; Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd [No 1] [1986] HCA 84; (1986) 161 CLR 681, Bryant v Commonwealth Bank of Australia (1996) 70 ALJR 306 and Chamberlain v R [1983] HCA 13; (1983) 153 CLR 514. So too does an applicant in this State for bail pending appeal; Brown v R (1979) 14 Tas R 74.

11 As a starting point, I note that by virtue of the Supreme Court Civil Procedure Act 1932, s12(2), all questions of costs are in the discretion of the Court, subject to the provisions of the Act and the Rules of Court. The Supreme Court Rules 2000, r65, now provides as follows:

"65 Costs of incidental applications

Unless the Court or a judge otherwise orders -

(a) the costs of an opposed application in a proceeding are part of the costs of the cause of the party in whose favour the application is determined; and

(b) the costs of an unopposed application in a proceeding are part of each party's costs of the cause."

12 Accordingly, the default position is that unless it is otherwise ordered, the costs of interlocutory applications form part of the costs of the cause in whose party the application is determined[1]. The discretion to order "otherwise" is unfettered. The Rules are silent as to when costs are payable, in the case of an order being made "otherwise", and given to one party .

13 As to the rationale of the rule, in Rafferty v Time 2000 West Pty Limited (No 3) [2009] FCA 727; (2009) 257 ALR 503, at 508 [20], Besanko J set out three purposes which it served. His Honour said:

"First, it avoids multiple taxations in a proceeding. Secondly, it avoids the apparent unfairness which may arise where, at an early stage of a proceeding, a party who is ultimately successful is required to pay costs to a party who is ultimately unsuccessful. Finally, it prevents interlocutory proceedings being used as a weapon to exhaust the financial resources of one of the parties."

As will be seen, the comments of Underwood J (as he then was) in the Bull Nominees case are of similar import.

14 In Bull Nominees, Underwood J considered the meaning of the expression "in any event", and went on to discuss how the discretion whether or not to order that costs be paid in any event, should be exercised. The Rules of the Supreme Court 1965, O80, r1(1), then provided that the costs of and incidental to all proceedings in the Court, shall be in the discretion of the Court or judge. In the course of considering the first question, his Honour referred to Allied Collection Agencies Ltd v Wood [1981] 3 All ER 176, in which Neill J said that: "Where on an interlocutory application the court intends that one party is to have the costs_,_ the usual form of order is 'costs in any event'."

15 Underwood J further examined the English position, noting that the "general practice was that, except in unusual cases where a party was entitled to costs of interlocutory proceedings, those costs were neither taxable nor payable until after the event." [My emphasis.] His Honour noted that RSC, O80, r1, was taken directly from an English rule, and said that "it may be inferred that the intention was that the English practice would be adopted, viz, that except in unusual cases, costs of interlocutory proceedings were neither taxable nor recoverable until the conclusion of the proceedings ...". [My emphasis.]

16 The passages in Bull Nominees in which Underwood J considered the question of how the discretion should be exercised unfortunately do not appear in the authorised report of the case. (I am sure this omission was unintentional.) At 4 of the unreported version [1997] TASSC 148, his Honour said[2],:

"I see no reason to interfere with the terms of the order made by the learned Master. Although the discretion to order costs conferred by the Supreme Court Civil Procedure Act 1932 and the Rules of Court is unfettered, Harman LJ in Adam & Harvey, Ltd v International Maritime Supplies Co, Ltd [[1967] 1 All ER 533] made it clear at 534, that, in his opinion, it was only in exceptional circumstances that a successful party on an interlocutory application was entitled to recover costs without awaiting the outcome of the action. Neill J appears to express approval of that general statement in Allied Collection Agencies Ltd v Wood and another [[1981] 3 All ER 176] at 181. That approach has received endorsement by the Rules of Court in the United Kingdom, New South Wales, the Northern Territory (O63.02(2)) and of the Federal Court.

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

17 As can be seen from these passages, Underwood J attributed the "exceptional circumstances" requirement, to what Harman LJ said in Adam & Harvey Ltd v International Maritime Supplies Co Ltd [1967] 1 All ER 533, as later approved by Neill J in Allied Collection Agencies Ltd v Wood [1981] 3 All ER 170. The exercise is to discover the origins of the statement and to examine its validity. Its origins might lie in the fact that, as noted in Quick on Costs, Thomson Reuters looseleaf ed at [1.1140], the practice of the common law courts before the Judicature Acts 1873 - 1875 was to have only one taxation at the conclusion of the action. Be that as it may, in Adam & Harvey Ltd, the point for determination was the meaning of an order for costs without any qualification as to when the costs had to be paid. It was held that in the absence of stipulation otherwise, the costs were taxable and payable forthwith. Harman LJ, who had made the order, said, at 534, that he intended that there be no immediate taxation. Later, his Lordship said:

" ... I did not intend that there should be this exceptional order for payment of costs at once, but that costs should be in any event those of the successful appellant."

18 In the Allied Collection Agencies Ltd case, the same point arose as to the as to the meaning of a costs order, silent as to timing. It was argued that the decision in the Adam & Harvey Ltd case had been made without regard to the wording of the English O62, r4(1),[3] and must have been reached per incuriam. Neill J held that the Court of Appeal had not so decided the case, and that he was bound by it. Neill J made reference to Settlement Corporation v Hochschild (1967) 111 Sol Jo 354. That report reads as follows:

"'After the dismissal of the appeal some doubt arose as to whether the appeal had been dismissed "with costs" or "with costs in any event", the briefs of leading and junior counsel having been differently endorsed in that respect. In the course of the application to ascertain the intention of the court, reference was made to Adam & Harvey Ltd v International Maritime Supplies Co Ltd ... which dealt with the respective effects of the orders.

LORD DENNING, M. R., said that the appeal had been dismissed with 'costs in any event'. His lordship desired to say that that was the usual order in interlocutory appeals, save in exceptional circumstances[4]."

19 In this context, I have not been able to find any reference in any case to "exceptional circumstances" or similar, earlier than the comments of Lord Denning MR in the Settlement Corporation case. As to later authority, the Bull Nominees case was referred to by Perry J in Vergola Pty Ltd v Vergola Asia Pacific SDN BHD [2002] SASC 5. At [28], his Honour said: "It is only in exceptional cases that the court will order taxation and payment forthwith." Thunderdome Racetiming and Scoring Pty Ltd v Dorian Industries [1992] FCA 291; (1992) 36 FCR 297, and Narellan Pools Pty Ltd v Compass Ceramic Composite Pty Ltd, Federal Court, Lehane J, unreported, 18 April 1996, were given as authorities for this proposition. With respect, the first case is not authority for that proposition. In Thunderdome Racing, Olney J, at 312, said:

"The rule does not suggest any particular criteria by which the court should be guided in approaching such an application, and accordingly I take the view that the discretion should be exercised in favour of 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, namely, that an order for costs of an interlocutory proceeding shall not entitle a party to have a bill of costs taxed until the principal proceeding in which the interlocutory order was made is concluded."

20 In the second case referred to, Lehane J in an ex tempore judgment said that he found it difficult to see a relevant matter which took the orders made "outside the ordinary course and into some category of exception".

21 Finally as to this aspect, I observe with respect, that the suggested need for exceptional circumstances does not in fact find direct expression in the rules of court of the various jurisdictions to which Underwood J referred in Bull Nominees (above). As an example of those rules, O62, r3(2) and (3) of the Federal Court Rules provide that where an order for costs is made, the court may require that the costs be paid forthwith, but that an order for costs of an interlocutory proceeding shall not, unless the court otherwise orders, entitle a party to have a bill of costs taxed until the principal proceeding in which the interlocutory order was made is concluded.

22 O62, r3(3), of the Federal Court Rules has been said to embody the general rule of practice as discussed in the second paragraph of the passage from Bull Nominees which I have set out above. This "enshrinement" of the general rule was noted by Lehane J in Vasyli v AOL International Pty Ltd [1996] FCA 804. At 3, his Honour observed that the power to order taxation and payment forthwith is one which has been rarely used, and continued:

"In one of his series of interlocutory judgments in the Allstate litigation, Allstate Life Insurance Co v Australia & New Zealand Banking Group Limited (No 14) 18 August 1995, unreported, Lindgren J suggested that the provision for leave to tax costs before the conclusion of proceedings and to order that those costs be paid forthwith was possibly under utilised. The fact nevertheless remains that the ordinary rule is usually applied; and even where there is a discrete interlocutory proceeding in respect of which a costs order is made, the taxation and payment of those costs are normally deferred until the proceedings are concluded."

Lehane J went on to consider the case before him, and concluded that it was "one of those rare cases where it is appropriate to make an order for taxation and payment forthwith ...".

23 The rule has been generally interpreted as conferring a discretion which should be exercised in favour of a party who establishes that the demands of justice require a departure from the general practice which is envisaged; Courtney v Medtel Pty Ltd (No 3) [2004] FCA 347 at [21]. A summary of the relevant principles relating to O62, r3 of the Federal Court Rules was made by Bennett J in Spotwire Pty Ltd v Visa International Service Association (No 2) [2004] FCA 571. There is no suggestion of any threshold test of exceptional circumstances or other fetter. At par[104] her Honour referred to a number of cases which had discussed the operation of the rule (which included McKellar's case) and said that the following principles emerged:

"• 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 from 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."

24 The specific comments of Weinberg J in the McKellar case which are the subject of the plaintiffs' submission, have been repeated with apparent approval in subsequent cases; see for instance Airservices Australia v Jeppesen Sanderson Inc [2006] FCA 906 at [31]; O'Keefe v Lloyd [2009] FCA 812 at [20]. In some cases, specific reference has been made both to the general rule being departed from only in "rare cases" or in "very special circumstances", and also to Weinberg J's comments, without discussion as to any modification to the way in which the principle is traditionally expressed or applied; see for example Courtney v Medtel Pty Ltd (No 3) (above) at [21], and Rafferty v Time 2000 West Pty Limited (No 3) (above) at 509 [22].

25 I think it is important to consider some fundamental aspects of the exercise of the costs discretion. SCR, r65, creates a default provision unless the Court "otherwise orders". That is an unfettered discretion. Where it otherwise orders, as agreed here, there is discretion as to whether to order that costs be payable forthwith. There is no doubt that in cases where it is appropriate that a party be ordered to pay the costs of interlocutory proceedings, the general rule is that those costs should be payable in any event. It is true that the circumstances in which the rule may be departed from have been described as exceptional or unusual. It is also true that cases in which the discretion is properly exercised in favour of ordering that the costs be payable forthwith, have been described as "rare". But to return to the question posed earlier, the real inquiry is whether such statements amount to a true fetter by way of a threshold test.

26 In Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, a case dealing with costs, the High Court discussed the role of guiding principles, and the danger that such principles may become entrenched as legal rules. Gaudron and Gummow JJ said, at 86 [35] (omitting references):

"In the administration of the discretion conferred by these provisions upon courts of general jurisdiction, practices or guidelines have developed. Observations by Brennan J in Norbis v Norbis are in point. His Honour said

'It is one thing to say that principles may be expressed to guide the exercise of a discretion; it is another thing to say that the principles may harden into legal rules which would confine the discretion more narrowly than the Parliament intended. The width of a statutory discretion is determined by the statute; it cannot be narrowed by a legal rule devised by the court to control its exercise'.

It is in that sense that there is to be understood the earlier statement in this Court as to the existence of "a general rule that a wholly successful defendant should receive his costs unless good reason is shown to the contrary".

27 Similarly, McHugh J, at 96 [65] said (again omitting references):

"Although the statutory discretion is broadly stated, it is not unqualified. It clearly cannot be exercised capriciously. Importantly, the discretion must be exercised judicially in accordance with established principle and factors directly connected with the litigation. In this manner, the law has gradually developed principles to guide the proper exercise of the discretion and, in some cases, to highlight extraneous considerations which, if taken into account, will cause the exercise of the discretion to miscarry. Consistent with the aim of justice, the law could not have developed otherwise. As Mason CJ said in Latoudis [v Casey [1990] HCA 59; (1990) 170 CLR 534 at 541]:

'it does not follow that any attempt to formulate a principle or a guideline according to which the discretion should be exercised would constitute a fetter upon the discretion not intended by the legislature. Indeed, a refusal to formulate a principle or guideline can only lead to exercises of discretion which are seen to be inconsistent, a result which would not have been contemplated by the legislature with any degree of equanimity.'"

28 Kirby J also discussed the general approach to statutory costs discretions. At 120 [134], his Honour made a number of "general remarks", and observed that judicial descriptions of a statutory discretion to award costs as "unfettered" or the like, cannot be taken at face value. Because the discretion is typically conferred on the court or tribunal to act judicially, "fetters, confinement and control of a sort are provided by the law." His Honour said that appellate courts should avoid the imposition of rigid requirements which would narrow a discretion afforded to the donees of the statutory power, but they retain a function to provide guidance, in general terms, to the considerations which the decision-maker can take into account. "They are not intended to confine the decision-maker to a rigidly mechanical approach ... Mechanical rigidity would amount to an abdication of the discretion ...". His Honour went on to remark that "although there are rules or ordinary principles which will guide the donee of power in the exercise of the discretion, they cannot extinguish the element of discretion. They must not be allowed to harden into rigid or inflexible requirements." (References omitted - emphasis added.)

29 An analogous situation to the one under consideration is the general rule that costs of proceedings follow the event. The discretion to award such costs is unfettered, but it is entrenched that the "usual" order is that costs follow the event. It has been said that a departure from this general rule is "extremely rare", "exceptional", or justified mainly in "special circumstances"; see G Dal Pont, Law of Costs 2nd ed (2009) at 22 [8.24], and the cases cited. It is not the law, however, that there is a threshold test of exceptional or special circumstances, or any like requirement, to be satisfied before the general rule is departed from. The touchstone is that which is required to do justice between the parties.

30 The dictionary meaning of the word "exceptional" is: "Of the nature of or forming an exception; unusual, out of the ordinary"; The New Shorter Oxford English Dictionary. The expression "exceptional circumstances" has been held to mean "out of the ordinary course, or unusual, or special, or uncommon"; R v Kelly [1999] UKHL 4; [1999] 2 All ER 13 at 20. A case in which an exception should be made in an exceptional case. Usually an order will be made that costs follow the event; unusually it will be ordered otherwise. In an ordinary case, the rule will be applied. In a special case, it might be otherwise ordered. So regarded, the application of descriptions such as "exceptional" to denote the circumstances which may justify departure from the usual order, does nothing other than to describe the operation of an established general rule in the context of an unfettered discretion.

31 As has been seen, the Supreme Court Rules 2000 make no express provision for the timing of the payment of costs where costs are given to one party. It is said that the general rule of practice is embodied in rules such as O62, r3(3) of the Federal Court Rules. As to any such statutory provision, I have found no suggestion that the "discretion is constrained by any particular circumstances or consideration"; (per Mildren J in Markorp v King (1992) 106 FLR 286 at 293.) The question in this case is to be determined on first principles. The discretion to order that costs be payable forthwith or in any event is unfettered. That discretion must be exercised judicially, and that includes acting on established principles. The established principle is that ordinarily the costs are payable in any event. The strength of the principle is such that it is regarded as the "usual" order. That strength is highlighted by the use of words such as "exceptional" and "rare", to describe the circumstances in which departure from the rule is justified. But the rule must be applied judicially, and not uncritically, in a hard and fast way.

32 In my view, there is no limitation on, or prescription of, the type or nature of circumstances which will warrant a departure from the general rule. If the expression "exceptional circumstances" has been intended to create a threshold test as a matter of law, then, with respect, I consider that to have been a wrong approach. I can find no support or warrant for such a limitation, which to me, would amount to an unjustified and inappropriate fetter on the discretion where none should exist. In that respect, I rely on the comments of the High court in Oshlack v Richmond River Council which I have set out above. However, I think the better view is that the use of the expression "exceptional circumstances" or similar, was intended to do little other than describe the operation of an established general rule in the context of an unfettered discretion in the way I have outlined above. If so, all that it means is that there is a way in which the discretion will usually be exercised, and if it is to be exercised otherwise, there must be something out of the ordinary which makes it fair as between the parties to do so. In my view that is the way in which the use of the expression should be regarded. That view of things is apparent from the highlighted part of the passage from the Bull Nominees case which I have set out above; that is, the general rule may be departed from where the interests of justice in the particular case require it.

33 Having said that, it is clearly arguable that the general rule has traditionally been regarded as a relatively rigid one. The frequent description of cases in which the general rule will not be followed as "rare" might suggest little flexibility in the approach. On the other hand, what it may indicate is the effect of the rationale of the rule and its proper application. Given the rationale, it may in fact seldomly be the case, that the circumstances make it fair as between the parties to order that the costs be payable forthwith. At the same time, I think it must be accepted that Weinberg J in the McKellar case was suggesting a more liberal approach, in the sense of a greater readiness to depart from the usual rule, in an appropriate case. However, his Honour's comments must be put in their context. What his Honour intended, I think, was accurately put by Graham J in Airservices Australia v Jeppesen Sanderson Inc (above) at [31], as follows:

"In lengthy and complex cases where substantial costs have been thrown away as a result of ill-considered pleadings being drawn, the power to order that costs thrown away be paid forthwith should be used less sparingly than it has in the past. Such costs should be capable of being recovered without the innocent party having to wait, possibly years, for that to occur (per Weinberg J in McKellar v Container Terminal Management Services Limited ...[41])."

34 First, I note the summary of the applicable principles made by Bennett J in the Spotwire case which is set out above. Similarly, in Fiduciary Ltd v Morningstar Research Pty Ltd [2002] NSWSC 432, after quoting the observations of Olney J in Thunderdome Racetiming which I have set out above, Barrett J went on to identify three categories of the case in which the court might order that costs be paid forthwith. They were:

• where the decision on the application determines a separately identifiable matter or the completion of a discrete aspect;

• where there has been unreasonable conduct on the part of the unsuccessful party; or

• where there is likely to be a considerable lapse of time between the application and the final determination of the proceeding.

35 The plaintiffs submit that the following factors justify that the costs to be ordered in their favour should be payable forthwith:

•

par12 of the defence was completely misconceived as a defence to the action in trespass as such, and should not have been drafted as it was;

•

it was not until the defendants' arguments were put that it became apparent that the implied constitutional freedom of communication was raised only in relation to the claim for aggravated and exemplary damages;

•

the permitted amendment to par12 amounted to a significantly different defence;

•

not insubstantial costs were thrown away as a result;

•

the counterclaim was such that it should not have been pleaded in the action, and was excluded as having little, if any, legal and factual connections with the action.

36 There is merit in some of these points. It is correct to say that I took the view that notwithstanding "unusual features" in the way in which the plaintiffs' claim for aggravated and exemplary damages was pleaded, it was not necessary to plead par12 of the defence as it was; [2009] TASSC 45 at [24]. (I should note that after my judgment was delivered, the plaintiffs amended the way in which the claims were pleaded, and the current defence raises no issue of implied constitutional freedom of communication.) The fate of the counterclaim speaks for itself. I do not accept though, that the permitted amendment effectively brings "a new proceeding", as influenced Lehane J in Vasyli v AOL International Pty Ltd (above).

37 Factors which militate against the making of the order the plaintiffs seek involve the nature of the action and the expected time before trial, together with what has occurred and might occur in terms of interlocutory proceedings. Delay before the final resolution of the principal action or principal matter is a significant factor; Australian Securities and Investment Commission v Mining Projects Group Ltd (No 3) [2008] FCA 952 at [24]; Life Airbag Co of Australia Pty Ltd v Life Airbag Co (New Zealand) Ltd [1998] FCA 545. As to the present action, it remains one for damages in trespass. As I have noted, no issue of the implied constitutional freedom of communications is now raised at all. Whilst the assessment of damages may have some complexity to it, the essential cause of action remains an uncomplicated one on the facts as I understand them. I am told that the action is likely to be ready for trial by the end of this year. On that basis, the final resolution is not "far away".

38 On the other hand, there is no significant aspect of incompetence or lack of diligence, nor any pursuit of several ill-fated versions of a pleading, or significant delay caused by the pursuit of an ill-considered pleading; see the Life Airbag case (above) and Harris v Cigna Insurance Australia Ltd (1995) ATPR 41-445 at 41,011. More significantly, there have been other interlocutory proceedings between the parties which have resulted in relevant costs orders. On both 9 April 2009 and 15 October 2009, orders were made that the defendants pay the plaintiffs' costs of applications relating to answers to interrogatories, in any event. On 6 July 2009, the plaintiffs were ordered to pay the costs of their application to amend the statement of claim, in any event. There is also the interlocutory application associated with the proceedings before me, and which on 22 April 2009 I adjourned sine die. I am told that the defendants will seek to have that re-listed for argument as to costs. All of this raises the possibility of at least more than one taxation were I to make the order the plaintiffs seek. Multiple taxations are to be avoided; Bull Nominees (above) and Barrett Property Group Ltd v Metricon Homes Pty Ltd (No 2) [2007] FCA 1823 at [33]. Lastly, the plaintiffs did not claim any financial detriment were they forced to await the final determination of the action for enforcing the order to be made in their favour.

39 Having regard to those matters, the plaintiffs have not satisfied me on the material that there is sufficient justification to depart from the usual order. Since reserving my decision, the parties have slightly modified their agreed position as to the essential order which should be made. Taking into account that position, my orders are as follows:

•

the defendants are to pay the plaintiffs' costs of the interlocutory application dated 9 February 2009, so far as that application related to the defence.

•

the 2nd - 11th and 13th defendants pay the plaintiffs' costs of the interlocutory application dated 9 February 2009, so far as that application related to the counterclaim.

•

those costs are payable in any event.

I certify that the interlocutory application was a proper matter for the attendance of counsel.

[1] Of course, the rule operates so that where, for instance, a plaintiff succeeds in an opposed application, the costs of that application are recoverable if the plaintiff is successful in the action. If not successful in the action, the plaintiff does not have to pay the defendant's costs of the application; see J T Stratford & Son Ltd v Lindley (No 2) [1969] 3 All ER 1122 at 1123.

[2] The second paragraph of this passage was referred to with apparent approval in Gunns Limited v Driveforce Pty Ltd [2009] TASSC 4 at [23].

[3] That rule provided that costs may be dealt with at any stage of the proceedings or after their conclusion, and may require the costs to be paid forthwith, notwithstanding that the proceedings had not been concluded.

[4] In Allied Collection Agencies, Neill J set out all of this passage but did not make it clear that everything after the words "in that respect" were directly taken from the report.