FEDERAL COURT OF AUSTRALIA

Hopeshore Pty Limited v Melroad Equipment Pty Limited [2005] FCA 385

PROCEDURE – costs – application for costs of unsuccessful motion to be paid on an indemnity basis – whether motion inherently inappropriate – whether motion unmeritorious

PROCEDURE – costs – application for costs awarded on an interlocutory basis to be taxed forthwith – general considerations

Federal Court Rules O 62 r 3

Allstate Life Insurance Co v Australia & New Zealand Banking Group (No 14) [1995] FCA 660 cited

Allstate Life Insurance Co v Australia & New Zealand Banking Group Limited (No 13) [1995] FCA 626 cited

Brasington v Overton Investments Pty Ltd [2001] FCA 571 cited

Eunson v Beaulieu United Ltd (2002) 190 ALR 110 cited

Hopeshore Pty Limited v Melroad Equipment Pty Limited (2004) 212 ALR 66 referred to

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

McKellar v Container Terminal Management Services Limited [1999] FCA 1639 cited

Murran Investments Pty Ltd v Aromatic Beauty Products Pty Ltd (2000) 191 ALR 579 cited

Spotwire Pty Limited v Visa International Service Association (No 2) [2004] FCA 571 cited

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

Vasyli v AOL International Pty Limited [1996] FCA 804 cited

HOPESHORE PTY LIMITED v MELROAD EQUIPMENT PTY LIMITED

NSD 1664 of 2003

BRANSON J

12 APRIL 2005

SYDNEY

THE COURT ORDERS THAT:

1.                  The costs referred to in [2] of my orders of 9 November 2004 be payable forthwith.

2.                  The costs referred to in [7] of the orders made by consent on 19 December 2003 be payable forthwith.

3.                  The applicant have leave to have a bill of costs in relation to the costs referred to in [1] and [2] above taxed notwithstanding that the principal proceeding is not concluded.

REASONS FOR JUDGMENT

1                     The applicant has made three applications arising out of a judgment published in this matter on 9 November 2004 (see (2004) 212 ALR 66). The orders made by me on that day were as follows:

‘1. The motion be dismissed.

2.                  The respondent pay the applicant’s costs of the motion.

3.                  The questions of whether the costs referred to in par 2 should be:

(a)               paid on an indemnity basis; and

(b)               paid forthwith;

be reserved.’

2                     The present applications are as follows:

(a)                That the applicant’s costs of the motion for security for costs be paid on an indemnity basis.

(b)               That the applicant’s costs of the motion for security for costs be payable forthwith.

(c)                That the respondents pay forthwith the applicant’s costs of the directions hearing held on 19 December 2003.

3                     No affidavit evidence was relied upon in support of the applications. For this reason I conclude that the applicant does not contend that the respondent did not take part in the mediation process referred to in [46] of the judgment, when held, in good faith.

4                     I shall deal first with the application for an order that the costs referred to in [2] of my order of 9 November 2004 be paid on an indemnity basis. The applicant has submitted, in effect, that the conduct of the respondent’s solicitors upon which I placed weight in deciding not to order the applicant to provide security for the respondent’s costs should also lead to an order that the applicant receive its costs of the security for costs application on an indemnity basis. It may be (I express no concluded view) that certain costs incurred by the applicant by reason of the earlier conduct of the respondent’s solicitors should be met by the respondent on an indemnity basis having regard to the principles to be derived from cases such as Life Airbag Company of Australia Pty Ltd v Life Airbag Company (New Zealand) Ltd [1998] FCA 545 (‘Life Airbag’). However, I am not persuaded that the costs of the security for costs application are among them. The security for costs application was made late but it was not an inherently inappropriate application for the respondent to make. Nor, the issue of delay aside, was it an application that was plainly unmeritorious. The respondent has already paid a price, as my earlier judgment reflects, for the conduct of its solicitors. I decline to order that the costs referred to in [2] of my order of 9 November 2004 be paid on an indemnity basis.

5                     I turn to the application that the costs of the motion for security for costs be paid forthwith notwithstanding that the proceeding is not concluded. There is no dispute between the parties as to the relevant principles that guide an exercise of the Court’s discretion to order that a party may have a bill of costs in respect of an interlocutory proceeding taxed ahead of the conclusion of the principal proceeding (see O 62 r 3(2)-(3) of the Federal Court Rules). Those principles are to be derived from decisions such as Spotwire Pty Limited v Visa International Service Association (No 2) [2004] FCA 571; Eunson v Beaulieu United Ltd (2002) 190 ALR 110; Brasington v Overton Investments Pty Ltd [2001] FCA 571; Murran Investments Pty Ltd v Aromatic Beauty Products Pty Ltd (2000) 191 ALR 579; McKellar v Container Terminal Management Services Limited [1999] FCA 1639; Life Airbag; Vasyli v AOL International Pty Limited [1996] FCA 804; Allstate Life Insurance Co v Australia & New Zealand Banking Group (No 14) [1995] FCA 660; Allstate Life Insurance Co v Australia & New Zealand Banking Group Limited (No 13) [1995] FCA 626 and Thunderdome Racetiming and Scoring Pty Ltd v Dorian Industries Pty Ltd (1992) 36 FCR 297.

6                     In view of the history of this proceeding, which is set out in my earlier judgment, I am persuaded that the interests of justice require that in respect of the costs of the motion for security for costs, there be a departure from the ordinary rule that an order for the costs of an interlocutory proceeding does not entitle a party to have a bill of costs taxed, and the costs paid, until the principal proceeding is concluded. As set out in my earlier judgment, I am satisfied that the respondent took steps to delay the time frame within which this proceeding could be concluded, that it was influenced to do so by its view as to the applicant’s financial fragility and that it did so in circumstances in which security had been provided for its claim against the applicant. This history suggests, in my view, that the applicant should not be required to await the conclusion of the principal proceeding before it enjoys the benefit of [2] of my orders of 9 November 2004. I propose to order that the costs referred to in [2] of my orders of 9 November 2004 be payable forthwith and that the applicant have leave to have a bill of costs in relation to those costs taxed notwithstanding that the principal proceeding is not concluded.

7                     Similar considerations apply to [7] of the orders made by consent on 19 December 2003. The respondent failed to comply with the timetable fixed by consent on that day and did so, as I have found, for the purpose of achieving delay. In the circumstances the applicant should not have to await the completion of the principal proceeding to reap the benefit of that order. Had the timetable fixed by consent on that day been complied with it is more likely than not that the principal proceeding would have been completed appreciably earlier than will now occur.

Associate:

Dated: 12 April 2005