legal principles
17 The August Orders require Dr Mintas to pay PlayUp's costs of the Stay Application as agreed or taxed. Accordingly, the August Orders would need to be varied in order for the Costs Application to succeed. The Court has a discretion to vary or set aside an interlocutory judgment or order after it has been entered: see r 39.05(c) of the Federal Court Rules 2011 (Cth). That discretion is to be exercised with caution and in accordance with the interests of justice: Australian Securities and Investments Commission v ActiveSuper Pty Ltd (No 4) [2013] FCA 318; Luo v Zhai (No 6) [2016] FCA 805.
18 Section 43 of the Federal Court of Australia Act 1976 (Cth) relevantly provides that a Court or Judge has jurisdiction to award costs in all proceedings before the Court including by awarding costs in a specified sum or on an indemnity basis: see subs 43(1), (3)(d) and (3)(g).
19 Rule 40.02 of the Rules provides:
40.02 Other order for costs
A party or a person who is entitled to costs may apply to the Court for an order that costs:
(a) awarded in their favour be paid other than as between party and party; or
(b) be awarded in a lump sum, instead of, or in addition to, any taxed costs; or
(c) be determined otherwise than by taxation.
Note 1: The Court may order that costs be paid on an indemnity basis.
Note 2: The Court may order that the costs be determined by reference to a cost assessment scheme operating under the law of a State or Territory.
20 In Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233 Sheppard J said:
4. In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. … Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at p 8) in Tetijo, "The categories in which the discretion may be exercised are not closed"…
21 In Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (No 2) [2018] FCAFC 112 a Full Court of this Court (Nicholas, Yates and Beach JJ) said:
[5] Section 43 of the Federal Court of Australia Act 1976 (Cth) confers a broad discretion on the Court to award costs in proceedings. In Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151, Black CJ at 152 stated the principles applicable to a claim for indemnity costs:
…it is well established that the starting point for any consideration of an application for indemnity costs is that in the ordinary case costs will follow the event and the Court will order the unsuccessful party to pay the costs of the successful party, on a party and party basis, a basis which will fall short of complete indemnity. Nevertheless, the Court has an absolute and unfettered jurisdiction in awarding costs, although the discretion must be exercised judicially. So indemnity costs may properly be awarded where there is some special or unusual feature in the case justifying the Court in exercising the discretion in that way.
[6] A well-established circumstance justifying an award of indemnity costs is an imprudent refusal of an offer to compromise (Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233 per Sheppard J). In such cases, a key question is whether the offeree's refusal of the offer was "unreasonable" when viewed in light of the circumstances existing at the time the offer was rejected (Black v Lipovac (1998) 217 ALR 386 at 432 per Miles, Heerey and Madgwick JJ; CGU Insurance Ltd v Corrections Corporation of Australia Staff Superannuation Ltd [2008] FCAFC 173 at [75] per Moore, Finn and Jessup JJ).
[7] The circumstances to be taken into account in determining whether rejection of an offer was "unreasonable" cannot be stated exhaustively but may include, for example:
(a) the stage of the proceeding at which the offer was received;
(b) the time allowed to the offeree to consider the offer;
(c) the extent of the compromise offered;
(d) the offeree's prospects of success, assessed as at the date of the offer;
(e) the clarity with which the terms of the offer were expressed; and
(f) whether the offer foreshadowed an application for an indemnity costs in the event of the offeree rejecting it.
(Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435 at [25] per Warren CJ, Maxwell P and Harper AJA; Beling v Sixty International S.A. (No 2) [2015] FCA 355 at [25] per Mortimer J).
[8] An unsuccessful party is not liable to pay indemnity costs merely because it received an offer to settle on terms more favourable than it achieved at trial and rejected that offer (CGU Insurance at [75]; Black at [217]-[218]). As we observed in the Appeal Reasons, albeit in the context of r 25.14(2) of the FCRs, assessment of the "unreasonableness" of an offeree's refusal of a settlement offer is a broad-ranging inquiry that is not restricted to consideration of the extent or quantum of the compromise offered.
22 On the question of whether indemnity costs should be ordered against self-represented litigants in Mahony v El Bayeh (No 2) [2017] NSWSC 325 Robb J said (at [13]):
Generally speaking, courts are more reluctant to make orders for indemnity costs against litigants in person than against legally represented litigants, although, in an appropriate case, they will make such an order. In Bhagat v Royal and Sun Alliance Life Assurance Australia Ltd [2000] NSWSC 159 at [13] Hodgson CJ in Eq observed:
… I accept that a court does have to make allowances for the position of litigants in person, and to try to ensure that such a litigant does not lose out because of lack of expertise; although there is a limit to what the Court can do in that regard, while still remaining an impartial determinant of a dispute. The Court may in those circumstances refrain from making orders against litigants in person for conduct that might be considered as justifying orders for costs against represented litigants. By the same token, litigants in person can cause great hardship and expense to other parties, through making allegations and claims that lawyers would recognise as allegations and claims that could not reasonably or even properly be made, and through making proceedings much longer and much more expensive than they would otherwise be, by not focusing accurately on the real issues in the case. Conduct of that nature by legally represented parties would often lead to orders for indemnity costs. Litigants in person may escape the consequence of indemnity costs, but I do not think that the circumstance that a party is a litigant in person is a ground for displacing the ordinary result that costs follow the event.
23 To like effect, in Quach v Health Care Complaints Commission (No 2) [2015] NSWCA 311, Meagher JA said:
[9] Where indemnity costs are sought against a litigant in person, the Court ought to consider the competing interests identified by Hodgson CJ in Eq in Bhagat v Royal and Sun Alliance Life Assurance Australia Ltd [2000] NSWSC 159.
…
[10] This Court has made orders against litigants in person for the payment of indemnity costs where their proceedings were "obviously doomed to fail" and the litigant maintained the proceedings after having been informed of that fact, or of a procedural defect in the formulation of their claim: Reimers v Health Care Complaints Commission [2013] NSWCA 366 at [23] per Barrett JA (Macfarlan and Meagher JJA agreeing). See also Martin v State of New South Wales (No 6) [2011] NSWCA 281 at [8].
24 Rule 40.13 of the Rules provides that if an order for costs is made on an interlocutory application, the party in whose favour the order is made must not tax those costs until the proceeding in which the order is made is finished. Accordingly, a party seeking that costs of an interlocutory application be paid forthwith requires an order pursuant to r 1.35, which confers a discretion on the Court to make an order which is inconsistent with the Rules, or r 1.34, which permits the Court to dispense compliance with any rule.
25 Dispensation with r 40.13 of the Rules will only be appropriate where a party can satisfy the Court that the interests of justice demand such dispensation. In Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 5) [2018] FCA 19 at [11] Perram J said:
… What is generally required is not just unreasonable behaviour but unreasonable behaviour which has required a party to incur significant costs over and above what it would have incurred had the case been handled with competence and diligence: Life Airbag. An order that costs be payable forthwith, in that regard, is not to be thought of as some form of especially emphatic indemnity costs order. Although the considerations underlying the two costs rules may, at times, overlap, they are driven by quite different considerations. Where costs are incurred as a result of unreasonable litigation behaviour of the opposing party the usual remedy is the award of indemnity costs: Colgate-Palmolive Company v Cussons Pty Ltd [1993] FCA 801; (1993) 46 FCR 225 at 233-34. It is only where unreasonable behaviour has the additional consequence of causing the incurring of significant additional expenditure by the opposing party that Rule 40.13 comes into view.
26 The Court's costs practice note (GPN-COSTS) applies to all proceedings in this Court. It relevantly provides that the Court's preference, wherever practicable and appropriate, is for the making of lump sum costs orders. However, the adoption of a lump sum costs procedure remains at the discretion of the judge.
27 In LFDB v Ms S M (No 2) [2018] FCA 2062 at [6]-[8] I set out the following principles in relation to the award of costs in a lump sum:
6. The Court's power to order lump sum costs is discretionary and may be exercised whenever the circumstances warrant it: Su v Australian Fisheries Management Authority (No 3) [2008] FCA 2018 at [1] (Reeves J).
7. A Full Court of this Court (Allsop CJ, Besanko and Middleton JJ) in Paciocco v ANZ (No 2) (2017) 253 FCR 403 at [16]-[17] explained the following in relation to the Court making orders for lump sum costs:
16. On 25 October 2016 the Chief Justice issued the Central Practice Note: National Court Framework and Case Management (CPN-1) ('Central Practice Note') and the Costs Practice Note (GPN COSTS) ('Costs Practice Note'). The Central Practice Note states that the determination of the quantum of costs of a successful party (in a proceeding) should not be delayed and, to this end, the Court will, where appropriate, facilitate the making of lump sum costs orders. The Costs Practice Note provides that the Court's preference, wherever it is practicable and appropriate to do so, is to make a lump sum costs order so as to finalise costs and avoid potentially expensive and lengthy taxation hearings. It makes clear that the Court should now proceed on the basis that taxation "should be the exception" and confined to matters which are unable to be determined otherwise: Costs Practice Note at [3.3]. The guiding principles are to reduce delay and cost when quantifying costs: Costs Practice Note at [3.1].
17. The Costs Practice Note provides for the Court to make use of sophisticated costs orders and procedures, and to take such steps as it considers necessary to ensure that it has the requisite level of detail to make a costs determination that is fair, logical and reasonable and to avoid orders that lead to potentially expensive and lengthy taxation hearings: Costs Practice Note at [3.3].
8. In Bitek Pty Ltd v IConnect Pty Ltd (2012) 290 ALR 288; [2012] FCA 506 at [18] Kenny J said the following in relation to the determination of the appropriate quantum of a lump sum costs order:
18. The starting point for the fixing of costs is the charges rendered by the applicant's solicitors: Beach Petroleum at FCR 124; ALR 165 and Hamod v New South Wales [2011] NSWCA 375 at [820] per Beazley JA (with whom Giles and Whealy JJA agreed). The sum of costs fixed should also be proportionate to the nature, including the complexity, of the case: see Canvas Graphics Pty Ltd v Kodak (A'asia) Ptd Ltd [1998] FCA 23. As Beazley JA said in Hamod, at [820], citing, among others, Beach Petroleum at FCR 123; ALR 164:
[820] The approach taken to estimate the costs to be ordered must be logical, fair and reasonable … This may involve an impressionistic discount of the costs actually incurred or estimated, in order to take into account the contingencies that would be relevant in any formal costs assessment … [Citations omitted.]