Costs
35 The relevant principles are not contentious. The starting point is s 43 of the Federal Court of Australia Act 1976 (Cth). Toohey J in Hughes v Western Australian Cricket Association (Inc) [1986] ATPR 40-748 at 48,136 set out the following general principles as to costs:
(1) ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order;
(2) where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expenses of litigating that portion upon which he has failed; and
(3) a successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party's costs of them. In this sense, "issue" does not mean a precise issue in the technical pleading sense, but any disputed question of fact or of law.
36 The applicants added that in Hockey v Fairfax Media Publishing Pty Ltd (No 2) [2015] FCA 750 at [88], White J said:
… courts are now more ready to apportion the costs awarded to a party who succeeds in only some of the claims he or she brings. This may reflect the increasing factual and legal complexity of modern litigation and the multiplicity of factual and legal issues it entails, and the tendency of applicants to pursue multiple claims involving different factual enquiries in the one proceeding. It may also reflect an encouragement by the courts to applicants to exercise some discrimination in their selection of the claims they litigate …
37 The applicants submit that the appropriate order as to costs should be that they be costs in the cause of the first respondent's SD Application. That is because, if they are successful in resisting the SD Application, they should be able to make a submission that they should have all of their costs of the "Privilege Argument" awarded. If, on the other hand, BankSA is successful in the SD Application, costs of the Privilege Argument should be made on the basis of the applicants paying 60% of BankSA's costs of, and incidental to, the Privilege Argument and BankSA paying 40% of their costs of, and incidental to, the Privilege Argument.
38 They urge that several cost orders should be made (rather than simply netting them off) because the applicants have been put to the significant expense of inspecting the documents and drawing the Kadlunga list, in circumstances where the first respondent subpoenaed a solicitor's file and a great deal of that material (40%) is not required to be disclosed to the first respondent. The applicants' costs, they say, will be likely to be higher than the first respondents' costs.
39 BankSA says it has been largely successful in resisting the applicants' claims of privilege, and so it seeks an order that it recover a substantial proportion of its costs relating to the Privilege Argument.
40 I am not prepared to make the costs of the Privilege Argument costs in the cause on the SD Application. As the applicants' submission shows, that would only operate to defer the proper allocation of costs of the Privilege Argument if the SD Application were unsuccessful. If it were successful, the applicants want the costs of the Privilege Argument allocated specifically, rather than that they be costs in the cause on the SD Application.
41 I cannot, and do not attempt to, predict the outcome of the SD Application. I am not prepared to impose on the judge hearing that application the possible task of costs allocation, to the extent they ought be allocated, when I am in as good, if not better, a position to do so. I have had the benefit of the full hearing of the Privilege Argument and am to a significant degree presently in a position to assess the validity of the competing submissions.
42 The Privilege Argument was a substantial and separate step in this proceeding. It was prompted by the subpoenas of BankSA on the SD Application, but it has been heard as a discrete issue with extensive preparation and detailed submissions. It was also prompted by the decision of the applicants (and to a degree the Trustee) to claim legal professional privilege over the many documents in issue. That is not to be critical of the applicants. They were entitled to make those claims. But the issue of costs arises in the present context because, to a large extent, their claims have been unsuccessful.
43 The applicants propose separate costs orders, the outcome of one to set off the outcome of the other, by the following route: approximately 16% of the 2174 documents subpoenaed were not the subject of claims to privilege. Of the documents over which privilege was claimed, some 13% were not inspected (as they were not responsive to the subpoenas), 19% were accepted by BankSA as privileged, and 8% were then found to be privileged and 60% were found not to be privileged.
44 It might also be said that, after the preparation of the list of "privileged" documents, excluding the documents which were not responsive to the subpoena and those which were accepted as privileged, the applicants' disputed claims to privilege were upheld with respect to only about 12% of those documents.
45 Of course, such percentage analyses are apt to convey a false picture when documents are addressed in blocs, by reference to issues. They also do not account for the substantial costs of drawing the Kadlunga list properly describing the documents over which the privilege claims were made and the basis for them, although (it might be said) the outcome of the disputed privilege claims shows that the list should have been considerably shorter. In any event, I accept the applicants' contention that their costs of preparation for the hearing of the Privilege Argument, because of the nature of the work involved, are likely to be significantly greater than those of BankSA.
46 On an analysis of the issues, BankSA says it was wholly successful in its challenge to documents over which the applicants claimed only litigation privilege; was largely successful in its challenge to documents over which the applicants claimed advice privilege; and in its challenge in respect of documents listed in Annexures 4 and 5 (third party communications, want of confidentiality and the like). It accepts it unsuccessfully advanced a challenge to privilege on its claims that there is a colourable case of abuse of process. I accept that the hearing was not substantially elongated by BankSA having advanced this contention as the role performed by the former solicitors for the applicants and for the Trustee was necessarily considered in relation to the claims of advice privilege and litigation privilege.
47 I accept the contention of BankSA that, in light of the mixed level of success, the Court should take a broad-axe approach to the question of costs. It is common ground that it is not possible to allocate costs based on the parties' respective successes on an individual document basis. For the reasons given, I do not think it appropriate to allocate costs simply by reference to the outcome in relation to the number of documents in issue.
48 In my view, the appropriate course is to award a proportion of the costs of the Privilege Argument to BankSA as the largely successful party. I adopt that course mindful of the alternative of several costs orders: see eg Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 3) [2007] FCAFC 119 at [11]. I do not consider this to be a suitable case for such orders as the taxing task of isolating the work allocated to one issue over or as against that of another. The alternative of several orders each based on a percentage of the costs would also either involve that exercise or would require the sort of broad brush approach which can be undertaken by a single percentage order, having regard to the extent to which the other party succeeded on certain issues and the particular features of the relative degree of work involved in preparation for the Privilege Argument, as noted above.
49 Obviously, there is no science in such an approach. It is a matter of judgment, with the benefit of the submissions, the other material referred to, and of course the degree to which BankSA succeeded on its claims and the time taken for various issues during the course of the hearing.
50 Having regard to those considerations, I order that the applicants pay to BankSA 60% of its costs of the Privilege Hearing to be taxed.
51 The issue of costs between the Trustee and BankSA can be shortly addressed. I have considered the submissions made on 13 May 2016. The Trustee claimed privilege on his own behalf over a number of documents, and those claims were partly upheld over the contention of BankSA. Separately, he identified a number of documents which he held, and which he said may have been subject to the applicant's privilege. He did not simply adopt the course of providing them to the applicants to decide whether to assert their potential privilege. So, to a degree, he seems to have asserted also a privilege in those documents on his own behalf. The latter aspects of his claims were rejected.
52 In my view, as between the Trustee and BankSA, and having regard to the considerations to which I have generally referred, the proper order in the circumstances is that BankSA should pay to the Trustee 30% of his costs of and incidental to the Privilege Argument. That, of course, leaves the issue of costs incurred in complying with the subpoena to be addressed by the judge dealing with the SD Application.
53 There will be orders accordingly.
54 At the hearing on 13 May 2016, I observed that the prospects of granting leave to appeal would be greater if there were a clear point of principle, rather than the application of principle. The orders now made do not themselves expose any clear point of principle, and as I have found neither the proposed grounds of appeal nor the submissions do that either.
I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.