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[2023] FCA 1130
Federal Court of Australia
2023-09-21
Katz JJ, McEvoy J
Original judgment source is linked above.
The Applicant's Position 17 The applicant submits that it was inappropriate for the Registrar to have ordered that costs be paid forthwith for the following reasons: (a) her reasons for making the order, namely that "there is continuing uncertainty as to the claims to be made in the proceeding and the timeframe over which they may be pursued (if at all)", and "where the respondents were represented at the hearing by pro bono counsel who do not hold an ongoing brief", are not a proper basis for making an order that costs are to be paid forthwith; (b) there is no relevant uncertainty, and the fact that the respondents were represented by pro bono counsel should not be a relevant factor in making the order; (c) the interests of justice do not favour an award of costs in all the circumstances; (d) the applicant will be prejudiced if the costs are to be paid forthwith as it may have to undergo multiple taxations and be deprived of the ability to set this costs order off against further costs orders made in its favour if it is ultimately successful in the proceeding. 18 The applicant refers, in particular, to Axent Holdings Pty Ltd v Compusign Australia Pty Ltd (No 3) [2018] FCA 6 at [15] where Kenny J, citing several authorities, noted that r 40.13 discourages interlocutory applications and recognises that it is usually inappropriate to require the unsuccessful party in interlocutory proceedings to pay costs immediately, since that party might ultimately succeed in the substantive proceeding. 19 In essence it is the applicant's position that there are no special circumstances which would justify making an order that the relevant costs be paid forthwith and departing from the general rule that this not occur: Rafferty v Time 2000 West Pty Ltd (No 3) (2009) 257 ALR 503 at 508 [20] (Besanko J).
The Respondents' Submissions 20 The respondents now contend for the following: (a) first, that their costs of and incidental to the interlocutory application (including this review application), and including the costs of pro bono counsel, ought to be paid forthwith and on an indemnity basis; (b) alternatively to (a), their costs of and incidental to the interlocutory application (including this review application), and including the costs of pro bono counsel, ought to be paid forthwith and on a party and party basis. 21 It is the respondents' position that it was appropriate for the Registrar to have made orders that the costs of the respondents' application be paid forthwith because the applicant's conduct regarding the preparation and filing of his pleading had been unreasonable: see Rafferty at 508 [20] - [21]. Also relevant is the inevitability of the long delay between the hearing and the ultimate conclusion of the proceeding: Orrcon Operations Pty Ltd v Capital Steel & Pipe Pty Ltd (No 2) [2008] FCA 24 at [18] (Besanko J); Harris v Cigna Insurance Australia Ltd & Dickie (1995) ATPR 41-445 at 41,011 - 41,012 (Kiefel J). In addition, the respondents submit that the interests of justice justify an order that they have their costs, noting that they have pro bono counsel: see Chancliff Holdings Pty Ltd v Bell [1999] FCA 1783 at [14] (Lee J). 22 The respondents contend that it would be appropriate for the costs of their strike out application, including this review, to be paid on an indemnity basis because the applicant has pursued his claim "in wilful disregard of the known facts or clearly established law", referring in this regard to Smolle v Australia and New Zealand Banking Group Limited (No 2) [2007] FCA 1967 at [3] (Weinberg J), quoting Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 (Sheppard J).
Costs paid forthwith 23 The Court has a broad discretion pursuant to s 43 of the Act to award costs in a proceeding. Costs will generally follow the event and a successful litigant will usually receive costs in the absence of special circumstances that warrant a departure from the general rule: Walker v State of Victoria (No 2) [2011] FCA 417 at [5] (Tracey J), referring to Ruddock v Vadarlis (No 2) (2001) 115 FCR 229 at 234 (Black CJ and French J). I accept the respondents' submission that there are no special circumstances in this case which would justify a departure from the general position that the respondents, having succeeded, should be awarded their costs of the strike out application. 24 Although it is correct to say that the general position with respect to an interlocutory application is that if a costs order is made, the party in whose favour it is made must not tax those costs until the proceeding in which the order is made is concluded (see r 40.13), this position is not invariable. The Court may order that costs be taxed and paid immediately where the interests of justice require it: Axent at [13]. 25 Having regard to the course of events described in paragraphs 4 to 15 above, and regardless of whatever instructions were given to Mr Stanarevic by the applicant, I accept that the applicant's conduct in the preparation and filing of his statement of claim has been unreasonable. The applicant failed to remedy defects in his pleading despite being informed clearly and cogently of the deficiencies. Significant delay has ensued, and appears to be continuing. The applicant still does not have leave to file an amended statement of claim. 26 For these reasons therefore I consider that there is a proper basis to depart from the general position and no reason to disturb the Registrar's order that the respondents' costs be paid forthwith.
Indemnity costs 27 As has been mentioned, however, the respondents now submit that the costs of their strike out application should be paid on an indemnity basis having regard to the history of the correspondence outlining the deficiencies in the pleading and the applicant's refusal to remedy them. They note, in this regard, the fact that the Registrar determined to strike out the entirety of the applicant's statement of claim on the basis that it was manifestly deficient (a conclusion which the applicant now apparently accepts and has not challenged). 28 Although the review application is a hearing de novo, in circumstances where it seeks review only of the costs component of the Registrar's orders and not the substantive order striking out the amended statement of claim, and the respondents did not seek indemnity costs before the Registrar, I do not consider it necessary or appropriate to depart from the party and party costs order made by the Registrar.
Conclusion 29 There will be an order that the respondents' costs of and incidental to their interlocutory application (including this review application) be paid forthwith on a party and party basis. I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McEvoy.
Raffin
Modern Assets Australia Pty Ltd
MCEVOY J: 1 On 15 February 2023 a Registrar of the Court heard the respondents' interlocutory application dated 16 July 2021, by which the respondents sought an order that the applicant's amended statement of claim dated 2 July 2021 be struck out. On 10 March 2023 the Registrar determined the application, and pursuant to r 16.21(1)(c) and (d) of the Federal Court Rules 2011 (Cth) ordered that the amended statement of claim be struck out with a right to re-plead. By paragraph 4 of her orders the Registrar also ordered that the applicant pay the respondents' costs of and incidental to the application, such costs to be paid forthwith. 2 By an amended interlocutory application dated 16 May 2023 the applicant seeks a review of paragraph 4 of the Registrar's orders dated 10 March 2023 pursuant to s 35A(5) of the Federal Court of Australia Act 1976 (Cth). Such a review requires a hearing de novo: Martin & Anor v Commonwealth Bank of Australia (2001) 217 ALR 63; [2001] FCA 87 at [6] (North, Mansfield and Katz JJ). The applicant also seeks an order that the respondents' costs of and incidental to the hearing on 15 February 2023 be reserved or follow the event, and that the costs not be payable forthwith. To be clear, the applicant seeks review only of the Registrar's costs order. 3 For the reasons that follow, I have determined that there is no occasion to set aside paragraph 4 of the Registrar's orders dated 10 March 2023, or to make the alternative order sought by the applicant.
(1993) 46 FCR 225
(2001) 217 ALR 63
(2009) 257 ALR 503
(2001) 115 FCR 229