(5) The Court may make an order of the kind mentioned in subrule (1) (2) or (4), or any other order, or may give such directions, and specify such consequences for non-compliance with the order, as the Court thinks just."
25 Previously, the power to make orders of this nature was contained in O 10, r 7. In Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388, Wilcox and Gummow JJ considered the principles which should govern the discretion to dismiss a proceeding under O 10, r 7 of the Federal Court Rules. In my respectful opinion, their Honours' observations apply equally to the power in O 35A, r 3(1). Their Honours said (at 396-397):
"The discretion conferred by O 10, r 7 is unconfined, except for the condition of non-compliance with a direction. As it is impossible to foresee all of the circumstances under which the rule might be sought to be used, it is undesirable to make any exhaustive statement of the circumstances under which the power granted by the rule will appropriately be exercised. We will not attempt to do so. But two situations are obvious candidates for the exercise of the power: cases in which the history of non-compliance by an applicant is such as to indicate an inability or unwillingness to co-operate with the Court and the other party or parties in having the matter ready for trial within an acceptable period and cases -- whatever the applicant's state of mind or resources -- in which the non-compliance is continuing and occasioning unnecessary delay, expense or other prejudice to the respondent. Although the history of the matter will always be relevant, it is more likely to be decisive in the first of these two situations. Even though the most recent non-compliance may be minor, the cumulative effect of an applicant's defaults may be such as to satisfy the judge that the applicant is either subjectively unwilling to co-operate or, for some reason, is unable to do so. Such a conclusion would not readily be reached; but, where it was, fairness to the respondent would normally require the summary dismissal of the proceeding.
In the second of the two situations we postulate, a significant continuing default, it does not really matter whether there have been earlier omissions to comply with the Court's directions. Ex hypothesi the default is continuing and is imposing an unacceptable burden on the respondent. But the continuance of the non-compliance is of the essence of this situation. If, when the Court looks at the matter, the direction has already been complied with, the defaulting applicant may be ordered to pay any wasted costs; but it would be difficult to justify the dismissal of the proceeding solely because of that default."
26 I do not think that this case falls within either of the two situations identified by their Honours. Whatever else might be said about the applicant's failure to comply with Court orders and its failure to put forward an affidavit explaining in a clear and simple fashion the reason or reasons for those failures, I do not think that it can be inferred that its non-compliance is such as to indicate an inability or unwillingness to cooperate with the Court and the other party or parties in having the matter ready for trial within an acceptable period. Nor do I think that this is a case in which the non-compliance is continuing and occasioning unnecessary delay, expense or other prejudice to the respondents. There has been non-compliance but I would not describe it as continuing, bearing in mind the outlines of evidence that have now been filed and the expert's report which will be filed. There has been delay and there has been some expense to the respondents, but I can make an order for costs in relation to that expense. In the end, I would not describe the applicant's conduct as amounting to "a significant continuing default".
27 In the circumstances, I considered it appropriate to decline to make orders staying or dismissing the proceedings and, instead, I adjourned the commencement of the trial for a relatively short period.
28 The respondents asked me to make a self-executing order in relation to the first order I made on 22 May 2007. In other words, they asked me to make an order that if the applicant does not comply with the first order then the proceedings do stand dismissed as to the whole of the relief claimed by the applicant. There is no doubt that I have the power to make such an order: O 35A, r 3(1)(c). I decline to do so. In Fisher v RAFCORP (WA) (1995) 57 FCR 1 at 19, the Full Court of this Court described such orders as unusual. I respectfully agree and I think that such orders should only be made in extreme cases. There may be many circumstances which arise subsequent to the making of such an order, which plainly call for a relaxation of a time limit fixed in the order and it would be unwise to place an obstacle in the way of a favourable exercise of the discretion. In my opinion, such an order should only be made when, in effect, all other efforts to ensure compliance have failed. The present is not such a case.
29 The respondents applied for the costs they incurred between 10 May and 22 May 2007, of the notice of motion dated 3 May 2007, of the hearings on 9 May 2007 and 22 May 2007 and of the adjournment of the trial on an indemnity basis.
30 In my opinion, the respondents are entitled to the costs of their notice of motion dated 3 May 2007. The applicant did not comply with the December orders as amended on 9 May 2007. They are also entitled to the costs of the hearings on 9 May and 22 May 2007 respectively because those hearings were primarily concerned with the variation of the December orders and the respondents' notice of motion. The respondents are also entitled to any costs occasioned by the adjournment of the trial. An adjournment of the trial was necessary because of the applicant's failure to comply with the orders of the Court and, in particular, the order as to the delivery of reports by expert witnesses. Finally, the respondents are entitled to any costs occasioned by the late delivery of statements. Clearly, those costs should be restricted to costs which have been wasted.
31 The Court's power to award costs is contained in s 43 of the Federal Court of Australia Act 1976 (Cth) and is a broad one. Order 62 of the Federal Court Rules deals with a number of matters relevant to an award of costs.
32 The ordinary rule is that costs are awarded on a party and party basis. From time to time, the Court has made an award of costs on a different basis. The authorities have identified various circumstances in which it may be appropriate to exercise the discretion to award costs on a different basis from a party and party basis. One such category is where there is evidence of particular misconduct by a party that causes loss of time to the Court and to the other parties. However, the authorities also make it clear that the categories of circumstances in which the Court may exercise its discretion to award costs on, for example, an indemnity basis are not closed. I refer to Colgate Palmolive v Cussons (1993) 118 ALR 248 at 254-257; Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (French J, unreported, 3 May 1991), Re Wilcox Ex Parte Venture Industries Pty Ltd (1996) 141 ALR 727 ("Re Wilcox"). The gap between party and party costs and indemnity costs may be increasing. However, while that may be a reason to review the scale rates, it is not in itself a reason to broaden the established criteria for awarding indemnity costs. As I understand it, that is a point made by Cooper and Merkel JJ in Re Wilcox (at 734).
33 I have carefully considered the circumstances in this case. Although the applicant's failure to comply with the Court orders cannot be described as minor and has led to the adjournment of the trial, I would not describe it as misconduct. In the circumstances, I decline to make a special order and costs will be payable on a party and party basis.
34 The final matter is that the respondents asked me to make an order that the costs be paid on or before a certain date. O 62, r 3(3) provides:
"(3) 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 or further order."
35 This is not a case in which it can be inferred that the applicant's failure to comply with Court orders is part of a delaying strategy by it, and the fact is that the trial will now take place on 16 July 2007. This means that the delay caused by the applicant's failures is a relatively short one. In the circumstances, I see no reason to depart from the general rule contained in O 62, r 3(3).