Scidera, Inc. v Meat and Livestock Australia Limited

Australian Flight Test Services v Minister for Industry, Science and Technology [1996] FCA 1425

Axent Holdings Pty Ltd v Compusign Australia Pty Ltd (No 3) [2018] FCA 6

Brasington v Overton Investments Pty Ltd [2001] FCA 571

Capic v Ford Motor Company of Australia Limited (Costs Forthwith) [2019] FCA 1065

Clipsal Australia Pty Ltd v Clipso Electrical Pty Ltd [2016] FCA 37

Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 5) [2018] FCA 19

Globaltech Corporation Pty Ltd v Reflex Instruments Asia Pacific Pty Ltd (No 2) [2023] FCA 476

Hun v Aljazeera International (Malaysia) Sdn Bhd (No 2) [2023] FCA 1546

Kazar v Kargarian [2011] FCAFC 136; (2011) 197 FCR 113

Lahoud v Lahoud [2012] NSWSC 284

Life Airbag Company of Australia Pty Ltd v Life Airbag Company (New Zealand) Ltd [1998] FCA 545

McKellar v Container Terminal Management Services Ltd [1999] FCA 1639

Miller v Director of Public Prosecutions (No 2) [2004] NSWCA 249

Northern Territory v Sangare [2019] HCA 19; (2016) 265 CLR 164

Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72

Paciocco v Australia and New Zealand Banking Group Limited (No 2) (2017) 253 FCR 403

Scidera, Inc. v Meat and Livestock Australia Limited [2025] FCA 308

Scidera, Inc. v Meat and Livestock Australia Limited (No 2) [2025] FCA 1236

Sivritas v Sivritas [2008] VSC 580; (2008) 23 VR 349

Watson v Kriticos (Costs of Summary Judgment Application) [2021] FCA 917

Watson v Kriticos (Costs Payable Forthwith) [2022] FCA 4

MEAT AND LIVESTOCK AUSTRALIA LIMITED ACN 081 678 364

ZOETIS AUSTRALIA PTY LTD ACN 156 476 425 (and others named in the Schedule)

1. The Third Respondent pay the costs of and incidental to its interlocutory application for summary dismissal of all the infringement claims against it dated 6 June 2025 to the Applicant, the amount of such costs to be determined by a Registrar on a lump sum basis following the hearing and determination of the proceeding.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

1 INTRODUCTION

2 PROPOSED COSTS ORDERS

3 THE PARTIES' SUBMISSIONS

4 DETERMINATION

4.1 Lump sum

4.2 Set-off

4.3 Costs not payable forthwith

4.3.1 R 40.13 of the FC Rules

4.3.2 Discretion

4.3.3 Set-off in the context of costs payable forthwith

4.3.4 Practice Notes

4.3.4.1 IP-2

4.3.4.2 CPN-1 and GPN-COSTS

5 ASSESSMENT

1. On 10 October 2025, I handed down my reasons for judgment dismissing Zoetis'Application for summary dismissal pursuant to s 31A(2) of the FCA Act and, or alternatively, r 26.01 of the Federal Court Rules 2011 (Cth) (FC Rules): Scidera, Inc. v Meat and Livestock Australia Limited (No 2) [2025] FCA 1236 (Scidera (No 2)). I adopt the background and defined terms used in those reasons.
2. On the same date, I made orders that subject to further orders as to costs, Zoetis pay costs of and incidental to the Application (Application Costs) to Scidera. At the judgment delivery, I indicated that both Scidera and Zoetis were to file submissions on costs, limited to one page.

1. The parties disagree on the appropriate form of orders. Scidera seeks orders that Zoetis pay the Application Costs, and that the amount of such costs be determined by a Registrar on a lump sum basis, to be payable forthwith after such determination (Scidera Proposed Costs Orders).
2. Zoetis opposed Scidera's Proposed Costs Orders and contended that the appropriate form of orders is one that varies order 4 of my orders dated 7 April 2025 (Pleadings Costs Order), in which I ordered that Scidera pay the respondents' costs thrown away by reason of the 9 May 2024 hearing. Zoetis proposes that that order be varied such that the amount of its costs be determined by a Registrar on a lump sum basis and to be payable forthwith after such determination. Further, Zoetis seeks orders that the amount of its costs thrown away be set off against Scidera's Application Costs (together, the Zoetis Proposed Costs Orders).

1. On 17 October 2025, Scidera filed its submissions on costs of the Application. In summary, it submitted the following in support of the Scidera Proposed Costs Orders:

(1) The Court has wide discretion under s 43(3)(a) of the FCA Act, which empowers the Court "to make an award of costs at any stage in a proceeding whether before, during or after any hearing or trial";

(2) The proceeding remains at an early stage, such that it will take considerable time to get to judgment, and even longer for Scidera to recover costs awarded, if successful;

(3) Zoetis' Application has caused considerable delay of approximately two years, and has required Scidera to incur significant costs;

(4) Scidera is receiving litigation funding to conduct the proceeding and would be exposed to prejudice if the funding available to it to conduct the substantive proceeding is eroded by the costs of interlocutory disputes that cannot be recovered until the conclusion of the proceeding. Relatedly, there is no reason to conclude that Zoetis would suffer hardship by costs payable forthwith;

(5) That the costs be made payable forthwith is consistent with [3.1] of the Intellectual Property Practice Note: Standard Directions for Australian Patent Proceedings (IP-2), which acknowledges the effect of costs payable forthwith in encouraging the parties to either resolve or narrow interlocutory disputes due to the immediacy of a costs award; and

(6) The making of a lump sum costs is consistent with the Full Federal Court authority in Paciocco v Australia and New Zealand Banking Group Limited (No 2) (2017) 253 FCR 403 at [13]-[20] (Allsop CJ, Besanko and Middleton JJ), which purportedly instructs that taxation should be the exception and confined to matters that cannot be determined otherwise.

(7) The Scidera Proposed Costs Orders are consistent with the overarching purpose s 37M of the FCA Act, the Court's Central Practice Note: National Court Framework and Case Management (CPN-1) and the Costs Practice Note (GPN-COSTS).

1. Zoetis filed responsive submissions on 23 October 2025, wherein it contended that the Zoetis Proposed Costs Orders ought to be made in lieu of the Scidera Proposed Costs Orders for the following reasons:

(1) Scidera has failed to demonstrate any basis for departing from the general practice embodied in r 40.13 of the FC Rules. There is no suggestion that the Application was unmeritorious, or that Zoetis acted unreasonably in pursuing it. Furthermore, there is no suggestion or evidence that the final determination of the proceeding is unusually far away to warrant a departure from the foregoing rule;

(2) No discrete issue has been resolved. As held in Scidera (No 2), the Court's views on claim construction and territoriality are expressly provisional, and Zoetis may yet prevail on these matters at trial;

(3) There is no suggestion or evidence that the interlocutory disputes are "draining the ability of one side to conduct the litigation", nor is there any suggestion or evidence that there is any question regarding Zoetis's capacity to meet a costs order;

(4) The Scidera Proposed Costs Orders are not supported by the Court's Practice Notes. IP-2 was issued after the filing and hearing of the Application. In any event, IP-2 does not displace r 40.13 of the FC Rules or change the default position on costs;

(5) As distinguished from Paciocco, the present matter does not concern a circumstance where there is a "successful party in a proceeding". Summary judgment applications are not ordinarily capable of resolution or narrowing via inter partes discussion; and

(6) The authorities in Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 5) [2018] FCA 19 at [5]-[11] (Perram J) and Watson v Kriticos (Costs Payable Forthwith) [2022] FCA 4 at [5]-[7] (Perram J) apply more or equally forcefully in respect of the Zoetis Proposed Costs Orders. Further, no identifiable feature of the present litigation makes it equitable for Scidera to be awarded its costs forthwith while denying Zoetis the ability to set off its costs under the Pleading Costs Order.

1. The Court's power to award costs arises under s 43(1) of the FCA Act, and, subject to any other Act, s 43(2) provides that such costs are at the discretion of the Court or Judge. The Court's discretion to award costs under s 43(3) of the FCA Act extends to, among other things:

(a) make an award of costs at any stage in a proceeding, whether before, during or after any hearing or trial;

[....]

(d) award a party costs in a specified sum;

[...]

(Emphasis added.)

1. Insofar as Zoetis criticises Scidera's submissions as to an award of the Application's costs in a lump sum by reference to Paciocco, that criticism is misplaced. First, Zoetis does not refer to any authority that the interlocutory nature of the Application has any bearing on the Court's discretion under s 43(3) of the FCA Act. Further, whilst not immediately clear, it appears that Zoetis takes issue with the purported application of Paciocco in the present case as authority supporting lump sum costs because Paciocco "related to costs at the conclusion of a proceeding, not interlocutory costs". Such a criticism is at odds with Zoetis's own request for lump sum costs at the interlocutory stage, to be set off against its costs arising from the Pleadings Costs Orders.
2. As the Court has discretion to make an award of costs in a specified sum and the parties agree that the Application Costs are to be assessed via a lump sum rather than via taxation, I will make orders to that effect. However, as I do not propose to order that the costs be payable forthwith, I do not consider that the lump sum should be determined until after the hearing and determination of the proceeding.

1. As I have indicated in [3]-[4] above, the parties disagree on whether the Application Costs are to be set off against Zoetis's costs under the Pleadings Costs Orders. Zoetis contends that no identifiable feature of this proceeding makes it equitable for Scidera to be awarded its costs forthwith while it is denied the ability to set off its costs under the Pleadings Costs Orders.
2. In Aristocrat Technologies Australia Pty Ltd v Allam [2017] FCA 812 at [11]-[14], Perram J expounded relevant principles regarding set off. First, the jurisdiction to allow set-off does not rest on statute or any general jurisdiction sourced from equity, but on the Court's inherent jurisdiction in relation to costs as part of the control it exercises over its own proceedings: Australian Beverage Distributors v Evans & Tate Premium Wines Pty Ltd [2006] NSWSC 560; (2006) 230 ALR 184 at [68] (White J); Sivritas v Sivritas [2008] VSC 580; (2008) 23 VR 349 at 390 (Kyrou J); Lahoud v Lahoud [2012] NSWSC 284 at [72]-[79] (Ward J).
3. Secondly, that the either the Application Costs or the respondents' costs arising from the Pleadings Costs Orders which are sought to be set off are unliquidated does not preclude the availability of set-off: see Allam at [12]; see also Lahoud at [82]. Thirdly, the power to order a set-off of costs is discretionary; the discretion is broad, and a variety of factors may be considered, including "the public interest, the efficient administration of justice, and the conduct of the parties": see Allam at [13], cited with approval in Globaltech Corporation Pty Ltd v Reflex Instruments Asia Pacific Pty Ltd (No 2) [2023] FCA 476 at [17] (Nicholas J); see also Miller v Director of Public Prosecutions (No 2) [2004] NSWCA 249 at [13] (Beazley JA).
4. The proceedings are at a relatively early stage. There has been no discovery, and no evidence has yet been filed. It is foreseeable that further costs orders may be made on future applications in both directions which may set at nought or outweigh any set-off at this juncture.
5. Further, as I do not propose to order that the costs be payable forthwith, I consider that it would be premature, and incur needless time and expense, to resolve the issue of set-off at this time.

1. Notwithstanding the parties' disagreement regarding the form of costs orders, both parties seek costs orders payable forthwith. For the reasons below, I consider that the circumstances do not warrant a departure from r 40.13 of the FC Rules or the exercise of discretion under s 43(2) of the FCA Act in favour of making orders that costs be payable forthwith.

1. The superseded Federal Court rules expressly conferred a discretion for the Court to direct that an interlocutory costs order be paid forthwith: see O 62 r 3(2) of the Federal Court Rules 1979 (Cth). However, the current FC Rules contain no equivalent provision, such that any direction for interlocutory costs to be paid forthwith now falls within the ambit of the Court's general discretion as to costs.
2. Rule 40.13 of the FC Rules provides a starting point and contemplates that a costs order in an interlocutory application does not, unless otherwise ordered by the court, entitle a party to have their bill of costs taxed until the principal proceeding is concluded:

40.13 Taxation of costs awarded on an interlocutory application

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.

1. The policy is that, in the ordinary course of litigation, costs awarded in interlocutory proceedings are not payable until the proceeding concludes, allowing set-offs against final costs orders. This was elucidated by Emmett J in Brasington v Overton Investments Pty Ltd [2001] FCA 571 at [13]:

The rationale for such a provision appears to me to be that, since an interlocutory proceeding does not resolve the final issues between the parties, it would, in ordinary circumstances, be inappropriate that an unsuccessful party in an interlocutory proceeding be required to pay costs immediately, since that party might ultimately be entitled to an order for costs in the substantive proceeding. The general principle appears to be that costs ought to be resolved when the proceeding has been concluded, and the rights of the parties have been finally determined.

(Emphasis added.)

1. More recently, Perram J observed at [6] in Kriticos that r 40.13 of the FC Rules is underpinned by the twin policy considerations:

[...] [F]irst, that it is generally undesirable that the parties should be exposed to multiple taxation processes during the life of one proceeding; and second and relatedly, that during the balance of the litigation, costs orders may be made in the opposite direction which will normally be capable of being set-off against earlier costs orders.

1. In light of the wording of r 40.13 of the FC Rules, the starting point is that interlocutory costs are not ordinarily payable forthwith. The main issue then concerns whether the interests of justice in the circumstances outweigh the foregoing policy considerations which underpin r 40.13 to justify an exercise of discretion for such a departure: Capic v Ford Motor Company of Australia Limited (Costs Forthwith) [2019] FCA 1065 (Perram J) at [17]; Axent Holdings Pty Ltd v Compusign Australia Pty Ltd (No 3) [2018] FCA 6 at [14] (Kenny J), cited with approval in Hun v Aljazeera International (Malaysia) Sdn Bhd (No 2) [2023] FCA 1546 at [17] (McEvoy J).

1. The Court's discretion to award costs is to be exercised judicially, meaning that it ought to be exercised on settled principles, according to rules of reason and justice and not according to private opinion, benevolence or sympathy: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [65] (McHugh J); Northern Territory v Sangare [2019] HCA 19; (2016) 265 CLR 164 at [24] (Kiefel CJ, Bell, Gageler, Keane and Nettle JJ). In Kazar v Kargarian [2011] FCAFC 136; (2011) 197 FCR 113, Greenwood and Rares JJ made the following observation regarding the Court's discretion to award costs at [5]:

Although the discretion is said to be unconfined, absolute and unfettered, the public interest in the quelling of controversies and the administration of justice is secured by recognising that the discretion ought to be exercised according to settled principle. Settled principle guides the exercise of the discretion and recognises that the modern embodiment of the post Judicature Act discretion as to costs has escaped "arterial hardening" (Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 per Gaudron and Gummow JJ at [38]) and has avoided elevating guiding principles into narrow legal rules controlling the exercise of the discretion (Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513 at 537 per Brennan J at 537; Wilson and Dawson JJ at 533). Because settled principle merely guides the exercise of the discretion, there is no automatic or absolute rule controlling the exercise of the discretion to the effect that costs always follow the event. Nor is there an automatic or absolute rule that in the absence of disentitling conduct, a successful party is to be compensated by an unsuccessful party. Moreover, the jurisdiction conferred by s 43(1), exercised by reference to the broad discretion conferred by s 43(2), is not constrained by any rule that there is no jurisdiction to order a successful party to bear the costs of the unsuccessful party (Oshlack v Richmond River Council (above) per Gaudron and Gummow JJ at [40] and [41]). As their Honours observe at [41] in Oshlack, there is nothing surprising or remarkable about the absence of hard arterial propositions in construing the scope of the discretion as the discretion must take account of the "... myriad circumstances presenting themselves in the institution and conduct of litigation, and to the very nature of litigation" within the scope of the court's jurisdiction. See also Probiotic Ltd v University of Melbourne [2008] FCAFC 5; (2008) 160 FCR 30 per Finn J at [1]; Rares J at [45]-[52] and Besanko J at [82] subject to the observations at [83]-[92].

(Emphasis added.)

1. In Kriticos, Perram J noted at [7] the circumstances in which the exercise of the discretion in favour of making an order that costs be payable forthwith may be justified:

The exercise of the discretion may be justified in a number of circumstances, including where (FKP v Spirits at [9]):

(a) the final determination of the proceeding is far away: Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (No 13) [1995] FCA 1459 at [5];

(b) a party has been required to incur significant costs over and above those which it would have incurred had the opposing party acted in handling the proceeding with competence and diligence: Life Airbag Company of Australia Pty Ltd v Life Airbag Company (New Zealand) Ltd [1998] FCA 545;

(c) following a successful amendment application, a case is essentially a new proceeding: McKellar v Container Terminal Management Services Ltd [1999] FCA 1639 at [19] and [40];

(d) a discrete issue has been resolved: Australian Flight Test Services v Minister for Industry, Science and Technology [1996] FCA 1425 at [7]; or

(e) there is some reason to think that interlocutory disputation is draining the ability of one side to conduct the litigation: Clipsal Australia Pty Ltd v Clipso Electrical Pty Ltd [2016] FCA 37 at [12].

(Emphasis added.)

1. Considering the foregoing settled principles, I do not accept that Scidera's submissions justify a departure from r 40.13, including because:

(a) the time until the final determination of the proceeding is not determinative and there is no reason to suppose there will be an inordinate delay before the final determination of the proceeding. The Respondents are assisted by detailed particulars of the allegations against them and the consideration of the pleadings in my reasons in Scidera SO and Scidera (No 2);

(b) Zoetis did not act unreasonably in the conduct of the Application, and being unsuccessful is not equivalent to handling the proceeding without competence and diligence. Accordingly, Zoetis' lack of success is insufficient to justify the exercise of discretion to depart from r 40.13 of the FC Rules. Perram J had previously exercised the discretion to make orders that r 40.13 be dispensed with in connection with the applicant's costs of the first respondent's unsuccessful application for summary judgment and strike out, and that those costs be payable forthwith: Kriticos at [8]; see also Watson v Kriticos (Costs of Summary Judgment Application) [2021] FCA 917. The "predominating factors" which led his Honour to make those orders was the "profound waste and delay" occasioned by the first respondent's application and "the depth of the misconception upon which it rested", both of which are absent in this case;

(c) while applicable to the question of whether the respondents' costs arising from the Pleadings Costs Orders ought to be made payable forthwith, this consideration is not applicable to the present question of whether the Application Costs of a summary dismissal application ought to be payable forthwith. In any event, McKellar is to be distinguished from this proceeding as in that case, the amendment application followed a successful strike out application of "a pleading which ought never to have been filed": see McKellar at [40] (Weinberg J);

(d) no discrete issue has been resolved. On this point, I accept Zoetis' submission that the Application dealt with a procedural question and that insofar as the Application broached questions of claim construction and territoriality, these questions were determined on a provisional basis and have not been finally resolved in the relevant sense; or

(e) whilst Scidera has indicated that it is receiving litigation funding to conduct the proceeding, its submission as to prejudice if its funding to conduct the substantive proceeding is eroded by the costs of interlocutory disputations is not supported by evidence.

1. Neither Scidera nor Zoetis has demonstrated cogent or persuasive reasons as to why the usual course set forth by r 40.13 should not be followed. The present proceeding is ongoing and, whilst the strike out application and the Application (together, the Interlocutory Applications) have caused some degree of delay, on the evidence there is nothing exceptional about the Interlocutory Applications that would justify either of the parties' costs being paid immediately.

4.3.3 Set-off in the context of costs payable forthwith

1. As I have indicated at [19] with reference to Kriticos, the mere possibility that costs orders made in favour of one party in the course of a proceeding may be set off against costs orders made in favour of the other, and the desirability of avoiding multiple taxations weighs against the exercise of discretion to dispense with r 40.13 of the FC Rules.

1. References were made to [17] of CPN-1; [4] and footnote 13 of GPN-COSTS, and; [3.1] of IP-2 (together, the Practice Notes) in support of the parties' submissions as to whether costs ought to be made payable forthwith.
2. Practice Notes are used to provide information to the parties and their lawyers involved in proceedings in the Court on particular aspects of the Court's practice and procedure. In general, Practice Notes complement legislative provisions or rules of the Court, set out procedures for particular types of proceedings and notify parties and their lawyers of matters which may require their attention. Importantly, the Practice Notes complement rather than displace r 40.13 of the FC Rules.

1. I reject Zoetis' submission that IP-2 does not apply to the present case because it was issued after the filing and hearing of the Application. On the contrary, at [1.3], IP-2 expressly contemplates that, to the extent practicable, it applies to proceedings whether filed before, or after, the date of issuing.
2. At [3.1], IP-2 notes that "[...] the Court may make a lump sum costs order, upon deciding an interlocutory application, to be paid within 14 days of the order being made" (emphasis added). The word "may" reflects rather than adds to the Court's discretion under s 43(2) of the FCA Act and the settled principles at general law. In the same paragraph, IP-2 notes that "[t]o enable the Court to do so, parties should file, at least one full business day prior to the hearing of an interlocutory application, a statement of costs that they claim for that application in the form annexed [...]". Neither Scidera nor Zoetis provided a statement of costs claimed or a statement certifying that the amount claimed is less than the amount incurred.
3. [3.2] of IP‑2 indicates that the aim of costs payable forthwith, in the context of interlocutory costs in patent proceedings, is to incentivise parties to resolve or narrow interlocutory disputes by creating immediacy. That purpose is more applicable to procedural disputes about discovery, confidentiality, privilege or the like than summary dismissal proceedings which, if successful, may finally resolve proceedings. Such procedural disputes should in most cases be capable of being resolved by negotiation between the parties rather than occupying scarce Court time and causing the parties additional expense and delay. That is not to say that in the appropriate circumstances, the costs of an unsuccessful summary dismissal application may be ordered to be payable forthwith.

1. The paragraphs of CPN-1 and GPN-COSTS relied on by the parties concern lump sum costs orders, rather than costs be made payable forthwith. Accordingly, they do not support either party's proposition for costs to be made payable forthwith.

1. For the above reasons, I will make an order that the Application Costs be determined on a lump sum basis. I will refer the matter to a Registrar to determine the appropriate lump sum for the Application Costs, together with any other costs to be determined after the hearing and determination of the proceeding.
2. I will not make orders that the Application Costs be set off against any amount payable by Scidera to Zoetis pursuant to order 4 of the Pleadings Costs Orders, or that the Application Costs be made payable forthwith.

I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Rofe.

GENOTYPING AUSTRALIA PTY LTD ACN 632 605 817 TRADING AS XYTOVET