Should the order provide for costs to be assessed and paid forthwith?
28 Ordinarily, costs are awarded on the basis that they will be paid when the proceedings have concluded. Approaching the matter in that way avoids the considerable burden of multiple taxations and allows for set-offs as between costs orders made in the course of the same proceeding. In this Court, where lump sum cost assessment are often made, the task of making an overall quantification is also best undertaken when all claims to costs are known.
29 The costs on an interlocutory application must not be taxed until the proceedings have finished: r 40.13, Federal Court Rules 2011 (Cth). However, for reasons given by Perram J in Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 5) [2018] FCA 19, the Court has a discretion to order costs to be assessed and paid forthwith.
30 As to the nature of that discretion, in Thunderdome Racetiming and Scoring Pty Ltd v Dorian Industries Pty Ltd (1992) 36 FCR 297, Olney J, when considering a similar rule concerning the costs of interlocutory applications stated:
The rule does not suggest any particular criteria by which the court should be guided in approaching such an application, and accordingly I take the view that the discretion should be exercised in favour of a party who establishes that the demands of justice require that there be a departure from what appears to be the general practice envisaged by the rule, namely, that an order for costs of an interlocutory proceeding should not entitle a party to have a bill of costs taxed until the principal proceeding in which the interlocutory order was made is concluded.
31 It has been said that the costs of an interlocutory application would only be ordered to be paid forthwith 'in very special circumstances': Vasyli v AOL International Pty Ltd [1996] FCA 804 (Lehane J).
32 In Rafferty v Time 2000 West Pty Limited (No 3) [2009] FCA 727, Besanko J expressed the view that the costs thrown away by reason of an adjournment should only be ordered to be paid forthwith if there was some tactical or reprehensible conduct or possibly substantial delay of a kind that would justify such an order: at [24]. These views accord with a general view that unreasonableness as to the bringing of an application is a reason why there may be an order for costs to be assessed and paid forthwith (see below). In Power Infrastructure Pty Ltd v Downer EDI Engineering Power Pty Ltd (No 2) [2010] FCA 1347 at [13], Katzmann J referred to Vasyli and Rafferty and counselled against formulating 'hard and fast rules'.
33 The decided cases indicate a range of matters to be considered in deciding whether to make an order for interlocutory costs to be paid forthwith notwithstanding the concerns about multiple taxation and facilitating set-offs. They include:
(1) whether there has been unreasonable conduct in the bringing of the application: Harris v Cigna Insurance Australia Limited [1995] FCA 1656; (1995) ATPR 41-445 at [16] (Kiefel J); Fiduciary Ltd v Morningstar Research Pty Ltd [2002] NSWSC 432; (2002) 55 NSWLR 1 at [12] (Barrett J); Hamod v State of New South Wales [2007] NSWSC 707 (Simpson J); Dale v Clayton Utz (a firm) (No 3) [2013] VSC 593 at [65] (Hollingworth J); Donnellan v Public Trustee [No 2] [2010] WASC 214 at [94] (Kenneth Martin J); and Rosegum Corporation Pty Ltd v Young, in the matter of Rosegum Corporation Pty Ltd (No 2) [2017] FCA 36 (McKerracher J);
(2) the capacity of a costs order to stultify proceedings, particularly where they are brought by persons who may be seen (even without specific evidence) to have limited resources: Olson v Keefe (No 4) [2019] FCA 691 at [27] (Bromwich J);
(3) whether costs thrown away could be more accurately assessed after the determination of the proposed substantive proceeding: Lamond (No 2) [2017] FCA 548 at [18] (Besanko J);
(4) whether a party will not have the benefit of an award of costs for a considerable period of time: Allstate Life Insurance Co v Australia and New Zealand Banking Group Limited (No 13) [1995] FCA 1459; and Life Airbag Co of Australia Pty Ltd v Life Airbag Co (New Zealand) Ltd [1998] FCA 545 (Branson J);
(5) whether security for costs has been provided: Lynx Engineering Consultants Pty Ltd v The ANI Corporation Ltd (t/as ANI Bradken Rail Transportation Group) (No 3) [2010] FCA 32 at [37] (McKerracher J); and
(6) whether the interlocutory application concludes a discrete aspect of the proceedings: Australian Flight Test Services Pty Ltd v Minister of Industry, Science and Technology [1996] FCA 1425 at [7]; and Bagley v Pinebelt Pty Ltd [2000] NSWSC 830 (Hamilton J).
34 As to the references to an order being justified by unreasonable conduct, the possibility of an order for costs thrown away to be payable immediately may be an important means by which the Court can discourage unhelpful interlocutory disputation and conduct inconsistent with the responsibility of all practitioners to confine the extent of court hearings to the real issues essentially for the fair, just and prompt resolution of the dispute and to confer with each for the purpose of doing so. In Allstate Life Insurance Co, Lindgren J expressed the view that the power to make an order for costs to be paid forthwith was 'possibly underutilised' and accepted that a history of interlocutory disputes being raised by a party may be a reason for considering whether to make an order for costs to be paid forthwith.
35 The Supreme Court of Western Australia has issued Practice Direction 4.7 which states:
As a general rule, where an order for costs is to be made against a party in interlocutory proceedings, the costs will be fixed and ordered to be paid forthwith or by a particular date. Likewise as a general rule, where costs are ordered to be in the cause, the quantum will be fixed.
That is for a number of reasons. First, as an action progresses, parties have an interest in knowing the quantum of costs awarded to or against them, or the liability for which awaits the cause.
Secondly, the historical practice of ordering costs to be paid 'in any event' does not sufficiently serve the purpose of discouraging ill-considered or needless interlocutory applications. The overwhelming majority of actions settle and the orders are not enforced. The apparent benefit to parties in whose favour such orders are made is illusory.
Thirdly, where actions do proceed to judgment and an order for costs, the subsequent taxation would be simplified if the costs of interlocutory procedures had already been dealt with.
Accordingly, the Court will generally order that interlocutory costs ordered to be paid by a party are to be paid forthwith or by a particular date, rather than in any event.
Further, judicial officers can be expected, in the usual run of routine matters, to fix the costs payable by reference to the attached schedule …, rather than ordering them to be taxed.
36 The Practice Direction 'serves the purpose of discouraging ill‑considered or needless interlocutory applications': Norilya Minerals Pty Ltd v Easterday [2009] WASC 191 at [11] and Huntingdale Village Pty Ltd (recs and mgrs apptd) atf Huntingdale Village Unit Trust v Perpetual Nominees [2013] WASC 352 (S) at [17]. However, even in that context, the Court will decline to award costs to be assessed and paid forthwith where there are concerns about the unfairness of not allowing set-offs: Norilya at [10].
37 In my view, the references in the cases as to unreasonableness as a basis for exercising the discretion to order that costs thrown away be assessed and paid forthwith are intended to capture those cases where there has been a relatively serious failure to observe the approach to the bringing or contesting of interlocutory applications that may be expected to be adopted in accordance with the modern approach to case management. It is not necessary for some form of improper conduct of the kind that might justify indemnity costs to be shown. However, where the order is sought on the basis of a single instance of behaviour that might be considered to be unreasonable then the consequence will need to be significant in order to justify a departure from the terms of r 40.13.
38 Further, it must be borne in mind that the rationale behind the rule that applies in this Court to the effect that interlocutory cost orders are to be assessed after trial should not be undermined. The approach in this Court is different to that followed in the Supreme Court of Western Australia.
39 For the following reasons, I am not satisfied that there should be a departure from the usual approach in this instance.
40 First, this is not a case where Mr Richmond persisted in seeking to justify the original pleading to the point of a contested hearing. After the extended case management conference, the pleading was substantially redrafted with the result that objections to the pleading were no longer maintained. There is no suggestion that those acting for Mr Richmond did not engage with the process of conferral as to matters raised concerning the pleading.
41 Second, there has been no attempt to quantify the possible extent of the costs thrown away. There are also likely to be difficulties in undertaking any such quantification because of the extent to which the factual matters remain as the foundation for the pleading albeit that the way in which those matters are relied upon to support particular causes of action has been changed in significant respects. The task of identifying the nature and extent of costs thrown away will be difficult to undertake in circumstances where there were amendments made at the same time to add new claims and the proceedings have not been finally determined. I do not accept the submission that the costs thrown away will be more easily assessed now than later. This is a reason why such matters are best assessed in a general way as part of the overall process of making a costs assessment when the outcome is known.
42 Third, this is not an instance where a discrete part of the case has been abandoned. It was contended that the amendments made by Mr Richmond had resulted in abandoned claims. However, I do not accept that submission. When account is taken of matters that are pleaded by way of defence, the factual issues and extent of legal issues remain substantially the same. This is not an instance where it has been demonstrated that there is a discrete aspect of the case that has been conceded or abandoned the costs of which might be readily separated at this stage from the overall costs of the proceedings and made the subject of an order for immediate assessment. It is certainly not the case that the amendments as a whole might be described as an abandonment of a significant aspect of the case advanced by Mr Richmond.
43 Fourth, it was contended that the amendments were not explicable by the fact that new material had emerged in the course of the conduct of the proceedings. Rather, the pleadings required amendment by reason of deficiencies in the manner in which they had been pleaded from the outset. There is merit in that submission. However, as I have said, the conduct in relation to the pleading is not of a kind that, in all the circumstances, might be described as unreasonable.
44 Fifth, it was contended that the proceedings are not likely to be resolved for some time and there was delay occasioned by the approach adopted by Mr Richmond to amendment. There is merit in these matters. However, some part of that delay was concurrent with the delay by Thundelarra in providing the Geologist's notebook.
45 Sixth, there is no suggestion of financial risk.
46 Seventh, the task of assessment will be a distraction from the substantive progress of the claim.
47 Eighth, there is some merit in the contention for Mr Richmond that the nature of the case means that there was a forensic task to be undertaken that, in any event, was likely to result in a period of delay while disclosure was obtained and there were consequent changes to the pleading.
48 Weighing these matters with the reasons behind rules such as r 40.13, I decline to order that the costs thrown away be paid forthwith.