THE COURT ORDERS THAT:

1.         Set aside the determination of the Taxing Officer that the order for costs made by Drummond J should not be taxed until the final determination of the application.

2.         Order the Taxing Officer to tax those costs subject to par 3 below.

3.         Stay such taxation until such time as Mr Bevan files and serves an affidavit deposing to the fact that there is no agreement between him and the respondent as to the payment of his costs by the respondent, and that he has no reasonable expectation that such will occur, or other earlier order.

4.         The applicant is to pay Mr Bevan's costs of this application, but the taxation of those costs is to be stayed until the filing of the affidavit to which I have referred, or other earlier order.

Note:                Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

In this application the applicant sues the respondent pursuant to the terms of an insurance policy.  It is not necessary to say any more about the substantive action at this stage.  As I understand it, in the course of the respondent's preparation for trial, the solicitor retained a Mr Bevan, a private investigator.   At some stage, the applicant became aware of the existence of Mr Bevan and of his involvement in the matter, but was not aware of the circumstances in which that involvement had arisen.   As a result, the applicant issued a subpoena directed to Mr Bevan.

The latter applied pursuant to O 27 r 9 to set aside the subpoena asserting that he, Mr Bevan, had been retained by the respondent's solicitor, and that as a result, such documents as were in his possession, and which were sought by the subpoena were privileged.  This matter came on before my brother, Drummond, who upheld the claim of privilege and set aside the subpoena.  His Honour also ordered the applicant to pay the costs of that application.  Pursuant to O 27 r 9, those proceedings were between the party issuing the subpoena, that is the applicant, and the recipient of the subpoena, Mr Bevan.  Although it seems that the respondent assisted Mr Bevan in that application in that affidavits were sworn establishing the respondent's claim to privilege, it was not a party to the application to set aside the subpoena. 

Pursuant to O 62 r 7 an order for costs is immediately taxable without further order, but pursuant to O 62 r 3(3) an order for costs of an interlocutory proceeding shall not, unless the Court otherwise orders, entitle a party to have a bill of costs taxed until the principal proceeding in which the interlocutory order was made is concluded or further order.

The characterisation of proceedings as interlocutory or final is notoriously difficult.  This is particularly so in the present case.  The principal proceedings, in the sense in which that expression is usually used, are between the applicant and the respondent.  Mr Bevan is not a party thereto.  The proceedings pursuant to O 27 r 9 between Mr Bevan and the present applicant were for relief which was final.  However,  Mr Bevan's application was made in the proceedings as between the applicant and respondent.

It is arguable that the rule was intended to prevent the taxation of all orders made in connection with a wider application until such time as the latter had been resolved.  Although  the meaning of the rule received careful consideration by Drummond J in Stack v Brisbane City Council (1996) 71 FCR 523, especially at pages 533 et seq, his Honour was not concerned with a situation such as the present where the benefit of the order was in favour of a person who was not a party to the principal proceedings.

Rule 3(3) purports only to prevent a party from having costs taxed prior to the termination of proceedings.  In the overall proceedings for substantive relief, Mr Bevan is not a party.  Further, the word “interlocutory” would not normally be used to describe an application to set aside a subpoena.   Such an application will normally be finally resolved as between the parties thereto.

The rule should be read, in my view, as restraining a party to the principal proceedings from taxing costs prior to the final resolution of those proceedings.  In those circumstances, I am of the view that r 3 does not prohibit the taxation of Mr Bevan’s costs.  Mr Bevan sought to do so, but the taxing officer declined upon the basis that the order was in interlocutory proceedings.  Although the exact nature of the present application before the court is unclear, in the course of argument it has been agreed that it may be treated as an application pursuant to O 62 r 11 to review the decision of the taxing officer.  I proceed in that way and set aside his decision to the effect that the taxation in question was prohibited by r 3.  I direct the Registrar to proceed to tax the costs subject to one other matter to which I now turn.  

It appears that the association between Mr Bevan and the respondent is very close, and that it is at least likely that Mr Bevan is being assisted in the conduct of these proceedings by the respondent.  The respondent would certainly seem to have an interest in them.  I do not think that any misconduct on the part of the respondent is implied in my drawing that inference. Given the general policy to be discerned from O 62 r 3, that parties to actions should not recover their costs pending the outcome of the claim for principal relief, it would, in my view, be inappropriate, assuming that the respondent is to meet Mr Bevan's costs of these proceedings, for the order against the applicant to be enforced at this time.  The applicant has asked for a stay of any taxation in those circumstances. If it be the case that Mr Bevan’s costs are to be paid by the respondent, then any taxation should stand over until the resolution of the question of principal relief.

In those circumstances, I order that taxation be stayed until such time as Mr Bevan files and serves an affidavit deposing to the fact that there is no agreement between him and the respondent as to the payment of his costs by the respondent, and that he has no reasonable expectation that such will occur.  In the event that such an affidavit is filed, then the taxation may proceed.  In the event that it is not, then the taxation should be stayed until further order.

Associate:

Dated:              6 October 1998