FEDERAL COURT OF AUSTRALIA

Australian Agricultural Co Ltd v AMP Life Ltd [2003] FCA 1134

COSTS – application for interlocutory injunction – applicant failed to establish serious issue to be tried – not appropriate to award costs on indemnity basis – order made in terms of Federal Court Rules, O 62 r 3(3) that costs of interlocutory proceedings be taxed forthwith

Federal Court of Australia Act 1976 (Cth), s 43(1), (2)

Federal Court Rules (Cth), O62 r 3

Supreme Court Rules 1970 (NSW), Pt 52A r 9

Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 cited

Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151 cited

Silktone Pty Ltd v Devreal Capital Pty Ltd (1990) 21 NSWLR 317 cited

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

Thunderdome Racetiming and Scoring Pty Ltd v Dorian Industries Pty Ltd (1992) 36 FCR 297 cited

Allstate Life Insurance Co v Australia & New Zealand Banking Group Limited (No 14) (Lindgren J, 18 August 1995, unreported) cited

Allstate Life Insurance Co v Australia & New Zealand Banking Group Limited (No 13) (Full Federal Court, 17 August 1995, unreported) cited

Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1 cited

Horrobin v Australia & New Zealand Banking Group Ltd (NSW Court of Appeal, 6 June 1997, unreported) cited

AUSTRALIAN AGRICULTURAL CO LTD v AMP LIFE LTD & ORS

N 1444 OF 2003

SACKVILLE J

SYDNEY

17 OCTOBER 2003

THE COURT ORDERS THAT:

1.                  The applicant pay the first and second respondents’ costs of the application for interlocutory relief.

2.                  The costs be paid by the applicant forthwith.

3.                  The first and second respondents be entitled to have their bill of costs taxed notwithstanding that the principal proceedings have not concluded.

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

REASONS FOR JUDGMENT

1                     On 30 September 2003, I delivered judgment dismissing a claim by the applicant (“AACo”) for an interlocutory injunction against the first and second respondents (“AMP”).  The third respondent (“Nebo”) was joined as a party to the proceedings because its rights would have been affected by the grant of an injunction. 

2                     On the day judgment was delivered, I ordered that Nebo’s costs of the application for interlocutory relief be paid by AACo on the usual party and party basis.  There is therefore no need to deal further with the question of costs as between Nebo and AACo.

3                     AMP, however, sought an opportunity to make written submissions as to the appropriate costs orders in respect of the interlocutory proceedings.  Accordingly, I gave directions for the filing of written submissions by AMP and AACo addressing the question of costs as between them.  The written submissions have now been received by me.

4                     AMP seeks orders that:

(a)                AACo pay the costs of the interlocutory proceedings;

(b)               the costs be paid on an indemnity basis; and

(c)                independently of (b), the costs be paid by AACo forthwith.

5                     AACo resists all the orders sought by AMP.  It submits that the costs of the interlocutory proceedings should be costs in the cause. 

6                     An applicant whose application for interlocutory relief fails is not necessarily ordered to pay the respondent’s costs of that application.  In some circumstances, as AACo submits, it is appropriate that the costs of the interlocutory proceedings be costs in the cause and await the final outcome of the proceedings.  However, in this case AACo did not fail simply on discretionary grounds associated with the balance of convenience.  It failed to establish that there was a serious issue to be tried that the representations made by AMP were misleading and deceptive.  In addition, I held that AACo did not have a sufficient interest to warrant the grant of an injunction which would infringe Nebo’s rights under its contract to purchase the Stanbroke Shares.  In these circumstances, in my opinion, AACo should pay AMP’s costs of the application for interlocutory relief. 

7                     There is no disagreement between the parties as to the principles that apply in determining whether an order should be made for the payment of costs on an indemnity basis: see Federal Court of Australia Act 1976 (Cth), s 43(1), (2); Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, at 232-234, per Sheppard J; Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151, at 153, per Black CJ, at 156-157 per Cooper and Merkel JJ.

8                     AMP relied on two factors as constituting special circumstances enlivening the discretion to award costs on an indemnity basis:

• AACo had commenced the proceedings in wilful disregard of principles that doomed the application for interlocutory relief to failure; and
• AACo had made groundless allegations that Mr Derwin and Mr Hughes had colluded to benefit Nebo at the expense of AMP’s policyholders.

9                     On balance, I do not think this is a case where it is appropriate to award costs on an indemnity basis.  It is true that there were always significant difficulties in AACo’s path, and that the substance of these obstacles was raised at an early stage in the hearing.  Nonetheless, AACo’s decision to persist with its claim for interlocutory relief cannot, in my opinion, properly be characterised for having been made in wilful disregard of existing law.  In particular, Silktone Pty Ltd v Devreal Capital Pty Ltd (1990) 21 NSWLR 317, provided arguable support for AACo’s legal stance on one significant issue, even though I ultimately rejected the contentions advanced on its behalf.

10                  I accept that AACo’s conduct in making allegations of impropriety in opening, which were then not pursued once the amended pleadings were filed on the second day, was not entirely satisfactory.  It is necessary, however, to bear in mind that AACo did not persist with those allegations beyond the first day.  I also take into account that AACo had to prepare for the interlocutory hearing under very considerable time pressures.  Accordingly, its advisors may not have had the opportunity to give detailed consideration to all the documents produced on subpoena prior to the commencement of the hearing.  I think it is likely that this difficulty contributed to (although it does not necessarily justify) AACo making allegations in opening for which, in truth, there was no evidentiary support.

11                  In seeking an order that AACo pay AMP’s costs of interlocutory proceedings forthwith, AMP relies on Federal Court Rules, (“FCR”), O 62 r 3.  This rule provides as follows:

“(1)     The Court may in any proceeding exercise its powers and discretions as to costs at any stage of the proceeding or after the conclusion of the proceeding.

 (2)      Where the Court makes an order in any proceeding for the payment of costs the Court may require that the costs be paid forthwith notwithstanding that the proceeding is not concluded.

 (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.”

12                  In Life Airbag Co of Australia Pty Ltd v Life Airbag Co (New Zealand) Ltd [1998] FCA 545, Branson J said this about FCR, O 62 r 3:

“Order 62 rule 3 does not give any indication of the matters to which the Court is to have regard in determining whether to order that certain costs be paid forthwith notwithstanding that the proceeding is not concluded.  Olney J in Thunderdome Racetiming and Scoring Pty Ltd v Dorian Industries Pty Ltd (1992) 36 FCR 297 at 312 expressed 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 shall not entitle a party to have a bill of costs taxed until the principal proceeding in which the interlocutory order was made is concluded.’

In Allstate Life Insurance Co v Australia & New Zealand Banking Group Limited (No 14) (Lindgren J, 18 August 1995, unreported) his Honour expressed the view that the provision of the Federal Court Rules allowing orders that costs be paid forthwith is ‘possibly under utilised’.  His Honour indicated that where the final determination of a proceeding was ‘far away’, it might be appropriate for use to be made of O 62 r 3.  In Allstate Life Insurance Co v Australia & New Zealand Banking Group Limited (No 13) (Full Federal Court, 17 August 1995, unreported) the Court, in considering the costs of an interlocutory appeal, said:

            ‘The litigation is complex.  It is unlikely that final judgment will be given until late 1996 or even later.  The successful parties to the appeals before this Court will therefore, in the ordinary course of events, not recover their costs for a long time.

            It would be wrong if the successful parties do not enjoy the fruits of their order for costs for such a long time.  The parties entitled to the benefit of the order for costs which this Court has made in appeals from interlocutory orders should not be deprived of that benefit until the case has been finally disposed of.’”

13                  The Supreme Court Rules 1970 (NSW), Pt 52A r 9, has been regarded by New South Wales Courts as having a similar effect to FCR, O 62 r 3, even though the language is by no means identical.  In Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1, Barrett J said this (at 4):

“A convenient and useful starting point is the following passage in the judgment of Priestley JA in Horrobin v Australia & New Zealand Banking Group Ltd (Court of Appeal, 6 June 1997, unreported), at 9:

            ‘None of the cases is on all fours with the present one; indeed, a reading of them emphasises the need for cases to be considered by reference to their own particular facts.  Nevertheless, those relied on by counsel…show there is a tendency for costs orders to be made payable forthwith and without waiting for the conclusion of further proceedings when the proceedings in respect of which the costs orders have been made are regarded as sufficiently self contained and detached or detachable from proceedings yet to be heard, whether between the same or associated parties, as to make it seem just for an actual payment to be made in the meantime’.

This identifies the first recognisable category of case, namely, where the application or aspect in respect of which the particular costs order is made before conclusion of the proceedings represents the determination of a separately identifiable matter or may be viewed as the completion of a discrete aspect”.

14                  In the present case, I think the application for an interlocutory injunction can fairly be regarded as a self-contained part of the proceedings.  The failure of the application for an injunction effectively means that the claim for this form of relief has been finally disposed of.  While it is open to AACo to pursue other relief against AMP, such as its claim for damages, the overwhelming likelihood is that the Stanbroke Shares have now been transferred to Nebo as the purchaser.  Moreover, there is nothing in the proceedings to indicate that AACo intends to seek relief against Nebo in these proceedings.

15                  In addition, if AACo does pursue claims against AMP, it would seem that the litigation will take a considerable period of time to resolve.  Unless an order is made for the payment of costs forthwith, AMP is unlikely, in the ordinary course of events, to recover its costs in respect of the interlocutory proceedings for a lengthy period.

16                  I think that each of these factors justifies making an order in terms of FCR, O 62 r 3(3).  In my opinion, the demands of justice require that there be a departure from the general practice that an order for costs of an interlocutory proceeding should not entitle a party to have a bill of costs taxed until the principal proceedings have been concluded.  Accordingly, I propose to order that AACo pay AMP’s costs of the interlocutory proceedings forthwith and that AMP be entitled to have its bill of costs taxed forthwith.

Associate:

Dated:              17 October 2003