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The underlying dispute involved two amounts. WCX had paid $135,180.55 into the Mitchells’ solicitors’ trust account for costs associated with representative proceedings funded by WCX. After terminating the funding agreement, WCX sought to recover that amount. A separate amount was $134,607.95, the gross sum costs order made against WCX by the primary judge. The Court described the combined amounts in issue as approximately $270,000: [6].

In the earlier proceedings, Griffiths AJA ordered WCX to provide $70,022.50 as security for the Mitchells’ costs of an appeal. His Honour also stayed the primary judge’s gross sum costs order pending the appeal, but required the total amount of that order to be paid into Court. WCX was ordered to pay costs of the earlier motions on an indemnity basis, fixed as a gross sum of $69,336.33 plus GST: [1].

After its review application was dismissed, the Mitchells sought their costs of that application on an indemnity basis. They also asked for a gross sum of $27,824.50 inclusive of GST. WCX objected to both forms of costs relief and challenged the Mitchells’ solicitor’s affidavit supporting quantification. WCX sought the opportunity to provide expert evidence and to cross-examine the solicitor if the Court accepted the affidavit: [3].

The Court decided that WCX should pay indemnity costs, that those costs should be fixed as a gross sum, and that the Mitchells could rely on their solicitor’s affidavit. WCX was given an opportunity to respond with evidence and written submissions, but not to cross-examine the solicitor. Importantly, the Court did not fix the final amount in this judgment. It set a process for the gross sum to be determined on the papers: [4], [12]–[14].

Why the court decided this way

The Court considered both the substance of WCX’s review arguments and the way the application had been conducted. It noted that a party seeking review of discretionary decisions needed to establish an error of principle or that the decision was plainly wrong. Given the nature of the decisions and Griffiths AJA’s detailed reasons, the Court said that this was a difficult threshold for WCX to meet: [7], referring to WCX 3 at [20].

The first example was WCX’s argument about s 1335 of the Corporations Act 2001 (Cth). WCX relied on Flynn v PPK Mining Equipment Pty Ltd [2023] NSWCA 151 as requiring the Mitchells to establish special circumstances before obtaining security. The Court accepted the explanation given by Griffiths AJA: Flynn was plainly distinguishable because one of the entities from whom security was sought in that case was a natural person. As a result, s 1335 did not apply in the same way: [8]. The Court described WCX’s points as “obviously unmeritorious” [8].

The Court also rejected WCX’s challenge to the condition attached to the stay. The Mitchells had agreed to a stay on the basis that the amount be paid into Court. The Court considered that a reasonable position because WCX had led no evidence in the security application that it had assets from which a judgment could be satisfied: [9].

WCX’s main answer was that the Mitchells had already recovered their costs from the funds in their solicitors’ trust account. The Court said that did not answer the relevant issue. The substantive dispute was whether those funds were available to the Mitchells to continue the class action. If the Mitchells succeeded on that issue, they had a strongly arguable basis for seeking the gross sum costs order as well as the trust funds: [9]. The Court therefore considered the condition within Griffiths AJA’s discretion and not an error warranting review.

For indemnity costs, the Court relied on the general circumstances identified in Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353 and Degmam Pty Ltd (In liq) v Wright (No. 2) [1983] 2 NSWLR 354: an application with no reasonable prospects of success, or conduct that unnecessarily adds to the costs of proceedings: [5]. It assessed WCX’s actual grounds against those principles, rather than treating an unsuccessful application alone as enough.

For a gross sum order, the Court relied on s 98(4)(c) of the Civil Procedure Act 2005 (NSW). It referred to the circumstances discussed in Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213, including a situation where assessment would be protracted and expensive and the party ordered to pay might not meet the resulting liability: [10]. Applying that reasoning, the Court identified “real doubt” about WCX’s ability to meet a costs order and considered that its approach to the litigation suggested it would take every available point, increasing costs out of proportion to the amount at stake: [11].

The costs evidence issue was addressed separately. The Mitchells’ solicitor’s affidavit itemised the work, the amount claimed for each item and the calculation. The Court found no reason to doubt the figures and considered WCX capable of responding by evidence and submissions. Given the amount claimed and the information supplied, cross-examination was not warranted: [13].

Before and after state of the law

The judgment does not purport to alter the law governing indemnity costs or gross sum costs orders. It applies principles drawn from existing authorities and a statutory power. Its contribution is an application of those principles to this particular review application and the particular record before the Court.

Before this decision, the relevant framework, as the Court stated it, included the possibility of indemnity costs where a claim or application had no reasonable prospects, or where a party unnecessarily contributed to costs: [5]. The Court cited Chaina for the first category and Degmam for the second. In this case, the Court found the grounds obviously unmeritorious, identifying the special-circumstances argument and the objection to the stay condition as examples: [8]–[9].

For gross sum costs, the statutory source identified was s 98(4)(c) of the Civil Procedure Act 2005 (NSW): [10]. The judgment describes a gross sum order as potentially suitable where assessment could itself be protracted and expensive, particularly where there is doubt the paying party could meet the liability produced by assessment. The Court’s reference to Harrison provides the stated authority for that proposition: [10].

After the decision, the statutory text and general principles were not changed by this judgment. The Court applied them to conclude that a gross sum order was appropriate here because of the perceived risk to recovery and the likely costs of continued dispute: [11]. The amount remained unresolved. The procedural order supplied a method for setting it, rather than a fixed figure: [14].

The judgment should therefore be read as a case-specific costs decision, not as a general rule that an unsuccessful review application attracts indemnity costs, or that doubts about a company’s ability to pay automatically require a gross sum order. The Court’s reasoning depends on its findings about WCX’s arguments, the evidence before it and the likely conduct of the costs quantification process.

Key passages with plain-English translation

At [5], the Court identifies two circumstances that may support indemnity costs: an application with no reasonable prospects, and conduct that unnecessarily contributes to costs. The word “may” matters. The passage describes circumstances in which the order can be appropriate; it does not say every unsuccessful case meets the test.

At [7], the Court notes that WCX had to establish an error of principle or that Griffiths AJA was plainly wrong. In plain English, WCX had to meet a demanding review threshold, not simply persuade the Court that it preferred a different outcome. The Court considered that threshold in light of the discretionary character of the earlier decisions and the detail of the reasons.

At [8], the Court says that WCX advanced “obviously unmeritorious points”. The example was the reliance on Flynn. The Court’s explanation was that Flynn involved a natural person among the entities from whom security was sought, so the statutory provision relied on by WCX did not apply there. The passage illustrates the Court’s reason for treating that argument as distinguishable, rather than setting out a new test for security applications.

At [9], the Court explains why the trust-account argument did not answer the issue. The live question was whether the money in trust could be used by the Mitchells to continue the class action. If it was not available for that purpose, its presence did not necessarily resolve whether the separate costs order could be recovered. The Court also relied on WCX having provided no evidence of assets from which a judgment could be satisfied.

At [10], the Court sets out the gross sum costs power and refers to Harrison. In plain English, the Court recognised that a single amount can be fixed without a full assessment where the circumstances warrant it, including where assessment could be costly and the resulting liability may not be met.

At [11], the Court applies that concern to WCX. Its conclusion was based on “real doubt” about WCX’s capacity to meet a costs order and a likelihood that further points would be taken, causing costs to become disproportionate. Those are findings in this proceeding, not a general finding about all litigation funders or companies.

At [13], the Court explains why it refused cross-examination. The affidavit gave item-by-item information and calculations; the Court saw no reason to doubt the figures. It considered written submissions and any evidence WCX chose to file to be adequate for the quantification stage.

What fact patterns trigger this precedent

The decision is most relevant to costs applications following a dismissed review of discretionary interlocutory orders, particularly where the reviewing party pursued arguments the court considers plainly unsustainable on the record. The judgment’s examples are specific: reliance on an authority that did not apply because the statutory context differed, and an objection that failed to engage with the actual basis of a condition attached to a stay: [8]–[9].

For indemnity costs, the judgment points to circumstances where a party’s arguments lack reasonable prospects or unnecessarily add to the costs of the proceeding: [5]. It does not hold that merely losing a review application, or advancing an argument that is ultimately rejected, is enough. The Court relied on its characterisation of the particular arguments and its assessment of their relationship to the issues actually in dispute.

For a gross sum order, the relevant combination in this case was concern about recoverability and the prospect of further costly disputes. The Court identified doubt about WCX’s ability to meet a costs order and a likely tendency to take every available point, including in the quantification process: [11]. The reasoning may be relevant where a full costs assessment itself risks consuming resources disproportionate to the costs being determined, but the judgment does not establish that a gross sum is required whenever a party’s ability to pay is questioned.

The affidavit ruling may be relevant where a costs claimant provides sufficiently detailed itemisation and the opposing party can identify disputed matters through written submissions or evidence. Here, the Court accepted the affidavit because each item and calculation was described and there was no reason to doubt the figures: [13]. The decision does not establish a general rule against cross-examination in costs disputes; it rests on the evidence and amount claimed in this matter.

How later courts have treated it

This judgment is dated 21 May 2025, and the material provided contains no decisions made after it. Accordingly, its treatment by later courts cannot be determined from the supplied judgment text.

The decision itself refers to the earlier stages of the same litigation: WCX 1, WCX 2 and WCX 3. WCX 1 and WCX 2 are identified as the decisions of Griffiths AJA that WCX sought to have reviewed: [1]. WCX 3 is identified as the judgment dismissing the review application and is cited for the review threshold: [1], [7]. Those references explain procedural history and the basis for the present costs hearing; they are not later treatment of this judgment.

The authorities discussed here are earlier authorities. Chaina and Degmam are cited for indemnity costs principles: [5]. Flynn is distinguished on its facts and statutory setting: [8]. Harrison is cited for the gross sum costs power and circumstances in which it may be exercised: [10]. No conclusion about how subsequent courts have adopted, limited or distinguished Litigation Fund WCX Pty Ltd v Mitchell (No 4) can be drawn from the provided material.

Still-open questions

The judgment leaves the amount of the gross sum open. The Mitchells sought $27,824.50 inclusive of GST, but the Court did not fix that amount in the orders. Instead, it directed WCX to file and serve any evidence and written submissions of up to five pages within 21 days, followed by up to two pages of responsive submissions from the Mitchells within a further seven days. The amount is to be fixed on the papers: [3], [14].

The judgment does not explain the detailed calculation that will ultimately be accepted or whether the claimed amount will be allowed in full. That question is reserved for the later papers process. Nor does it set out a general evidentiary standard for determining gross sums. It explains why this affidavit was admissible and why cross-examination was unnecessary in the circumstances: [12]–[13].

The reasons also do not decide the substantive appeal concerning the trust funds or the primary judge’s costs order. They describe those matters to explain why the security and stay decisions were made and why the trust-account argument did not answer the stay condition: [6], [9]. The substantive merits remain distinct from the costs disposition in this judgment.

Finally, the Court’s concern about WCX’s ability to meet a costs order is stated as a finding in this case. The extract does not identify the evidence underlying that concern in detail, or set out a general test for proving inability to pay. The judgment’s reasoning is therefore most safely understood by reference to its specific findings, rather than as a categorical rule for other applicants or costs disputes.

This is general legal information, not legal advice. Zoe can make mistakes. Before acting on or relying on this analysis, have it checked by a qualified Australian lawyer.