FEDERAL COURT OF AUSTRALIA

Day v Mercedes-Benz Australia Pty Ltd [2010] FCA 1183

REASONS FOR JUDGMENT

1                                             By order made on 8 May 2009 the respondents’ application that the third applicant, Canberra Star Motors Pty Ltd (in liq) provide security for costs was dismissed.  The costs of that application were reserved. 

2                                             The effect of such an order for costs is that the costs “follow the event unless the Court or a Judge otherwise orders”; Federal Court Rules O 62 r 15.  The “event” is the outcome of the principal proceedings relating to any order for costs of the proceedings.  As Lee J stated in Woods v Walsh (1989) 22 FCR 204 at 206-207:

The outcome of the principal proceedings would be theoutcome relating to any order for costs of the proceedings.  Although the words "follow the event" may mean "according to who wins", unless an order is made in respect of costs there would be no event in respect of which the provisions of r 15 could operate.  If no order for the payment of costs is made on disposal of the cause or matter, or an order is made that no costs be paid, no foundation for the taxation of the reserved costs would be provided by r 15.  The effect of the rule, therefore, is to make reserved costs of interlocutory proceedings costs in the cause of the successful party in the principal proceedings unless some other order is made in respect of them.

[citations omitted]

3                                             In other words the party that is successful in the proceeding and in whose favour a costs order is made, will have its costs, including reserved costs, unless some order to the contrary is made.  That being so, the order for costs to be reserved effectively dealt with the issue of costs. 

4                                             While it was open for the third applicant to seek an exercise of the Court’s discretion to vary the order, such an application should have been made without delay.  In fact, however, the issue was not raised with the Court until a directions hearing on 5 November 2009 when the third applicant indicated that it wished to make submissions in support of a variation of the order.  I did not object to submissions being made and indicated that, if so, I would deal with the matter in chambers.  It was not until October 2010 that written submissions were filed by the respondent (on 15 October) and by the third applicant (on 22 October 2010).  

5                                             The third applicant rejects the allegation of delay made by the respondents and points out that on 12 May 2009, four days after the application for security was rejected the solicitors for the third applicant wrote to the respondents’ solicitors inviting them to consent to a costs order in favour of the third applicant, in lieu of which they proposed to apply to the Court for such an order.  Apparently there was no reply to this letter. 

6                                             The third applicant’s submission overlooks the fact that it is the delay in seeking an exercise of the Court’s discretion to vary the costs order that is relevant.  The fact that it raised the matter with the respondents shortly after the order was made is not to the point.  Nor was it incumbent on the respondents to raise the matter.  The respondents did not, and do not now, seek a variation of the order made on 8 May 2009.  

7                                             The third applicant offers no explanation for its delay in seeking a variation of the order.  It submits however that its delay has not prejudiced the respondents and implies that for this reason it is not a relevant consideration.  I do not agree.  In my view there is considerable public interest in orders made by the Court being regarded as settled and final, subject of course to the established appeal processes.  As McLelland J observed in Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 at 46:

It would be conducive to great injustice and enormous waste of judicial time and resources if there were no limit on the power of a party to have any interlocutory application or order relitigated at will.

8                                             Any application for variation of an order should be made promptly.  Where there had been delay a full explanation for that delay should be provided.  The cogency of the reasons must be commensurate with the length of the delay.  In the case of a delay of more than one year there would need to be very compelling reasons to justify varying the order.  No such reasons have been given.  

9                                             The application for a variation of the costs order made on 8 May 2009 is dismissed.

Associate:

Dated:         1 November 2010