Federal Court of Australia

Leach v Burston (No 2) [2022] FCA 178

ORDERS

THE COURT ORDERS THAT:

1.    The applicant’s costs of and incidental to the hearing of the interlocutory application filed by the respondent on 14 September 2021 are costs in the cause.

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

REASONS FOR JUDGMENT

HALLEY J:

introduction

1    On 10 February 2022, I made orders striking out three paragraphs of the applicant’s points of claim and summarily dismissing the applicant’s cause of action alleging a contravention of s 28G(2) of the Sex Discrimination Act 1984 (Cth) (SD Act), and otherwise dismissing the respondent’s interlocutory application filed on 14 September 2021 seeking summary judgment against the applicant and to strike out the points of claim (Interlocutory Application): see Leach v Burston [2022] FCA 87.

2    I also made orders on that date providing that, in the absence of a consent position, each party should by no later than 24 February 2022 file and serve a copy of their proposed orders as to costs, together with an outline of written submissions in support not exceeding two pages in length.

3    The parties have now filed proposed orders and written submissions on costs.

4    The applicant seeks an order that the respondent pay 60% of her costs of and incidental to the hearing of the Interlocutory Application and her costs of her application in relation to the costs of the Interlocutory Application.

5    The respondent seeks an order that the costs of and incidental to the hearing of the Interlocutory Application be costs in the cause.

6    I have concluded for the reasons outlined below that the appropriate order is that the applicant’s costs be costs in the cause.

Relevant principles

7    The Court has a broad discretionary power to award costs pursuant to s 43(2) of the Federal Court of Australia Act 1976 (Cth) (Act). The discretion must be exercised judicially, not arbitrarily or capriciously, having regard to the relevant principles and the justice of the case in all the circumstances and cannot be exercised on grounds unconnected with the litigation: Summers v Repatriation Commission (No 2) [2015] FCAFC 64 (Summers) at [14] (Kenny, Murphy and Beach JJ), citing Trade Practices Commission v Nicholas Enterprises Pty Ltd and Others (No 3) (1979) 42 FLR 213; [1979] FCA 143 (at 219 (Fisher J); InterPharma Pty Ltd v Hospira, Inc (No 4) [2018] FCA 45 (InterPharma) at [8] (Kenny J).

8    In the ordinary course, in the absence of special circumstances justifying some other order, the general rule is that costs will be awarded to the successful party, that is, costs will follow the event: Summers at [14]; Ruddock and Others v Vadarlis and Others (No 2) (2001) 115 FCR 229; [2001] FCA 1865 (Ruddock) at [11] (Black CJ and French J); Vantage Holdings Pty Ltd v Huang (No 2) (2015) 232 FCR 556; [2015] FCA 185 (Vantage Holdings) at [12] (Collier J).

9    Rule 40.04(a) the Federal Court Rules 2011 (Cth) (FCR) provides that:

If no order for costs is made on an interlocutory application or hearing, the costs of the application or hearing:

(a)     if an order is made in favour of any party—follow the event; or

(b)     if no order is made in favour of any party—are taken to be costs in the cause of the successful party to the proceeding.

10    Costs orders in favour of parties that have succeeded in obtaining orders on an interlocutory basis, consistently with the default positon, are commonly made in circumstances where a party has succeeded on a discrete issue, such as the determination of a separate question in advance of a final hearing, although each case will turn on its particular facts and circumstances: Taylor (liquidator), in the matter of Heading Contractors Pty Ltd (in liq) v Heading (No 2) [2021] FCA 925 at [18] (Charlesworth J).

11    There is, however, a distinction between an interlocutory order that disposes of a separate question or a discrete issue in advance of a final hearing and, by way of example, an interim injunction that is obtained for the purpose of preserving the status quo pending a final determination of an applicant’s cause of action. In the latter case, the Court has not conclusively determined any controversy between the parties, it has only made a preliminary assessment of the strength of an applicant’s cause of action and had regard to the balance of convenience pending trial: Australian Securities and Investments Commission, in the matter of Whitebox Trading Pty Ltd v Whitebox Trading Pty Ltd (No 2) [2017] FCA 385 at [6] (Gleeson J).

12    An order that each party’s costs be costs in the cause or that an applicant’s costs be costs in the cause following the determination of an application for an interlocutory injunction has been described as the “usual order” and “a shorthand form of giving effect to the principles that govern the court’s discretion … where there are no countervailing or different circumstances to warrant the exercise of the discretion in a different manner”: His Eminence Metropolitan Petar, Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand & Anor v The Macedonian Orthodox Community Church St Petka Incorporated & Anor (No 2) [2007] NSWCA 142 (Metropolitan Petar) at [27] (Beazley, Giles and Hodgson JJA).

13    The following rationale for a costs in the cause order was advanced by the New South Wales Court of Appeal in Metropolitan Petar at [21]:

The rationale for making an order that costs be costs in the cause is that, at the stage of granting an interlocutory injunction, the court is not in a position to adjudicate on the ultimate outcome of the proceedings. Rather, provided there is a reasonable case to be tried, the Court’s focus in deciding whether to grant the application for interlocutory relief is on other considerations and, in particular, on determining whether, on the balance of convenience, an injunction ought to be granted. Accordingly, if a plaintiff who applies for an interlocutory injunction is not ultimately successful in the proceedings, that plaintiff should not receive the costs of the application for an injunction which, when the matter is considered in overview cannot be sustained. However, as already explained, each case must depend upon its own facts.

14    I concluded in RB (Hygiene Home) Australia Pty Ltd v Henkel Australia Pty Ltd (No 2) [2021] FCA 1194 at [14], following a review of the authorities that I cited in that paragraph of my reasons, that the usual but not invariable practice is that in the absence of any specific disentitling conduct, the appropriate costs order where an applicant has been successful in obtaining an interlocutory injunction is that the applicant’s costs be costs in the cause, rather than each party’s costs in the cause.

15    In 3 Property Group 13 Pty Ltd (in liq) v 3 Property Group 17 Pty Ltd (No 2) [2021] FCA 1371 at [19], I concluded that the principles relevant to the award of costs following the grant of an interlocutory injunction are generally applicable to an award of costs following an unsuccessful challenge by a person to the continuation of a caveat pending a final determination of the claims advanced by the caveator, citing International Computer Network Pty Ltd v Lumos International Pty Ltd [2018] NSWSC 1793 at [94]-[96] (Ward CJ in Eq) and Stone Living Pty Ltd v 3 Property Group 9 Pty Ltd (No 2) [2020] ACTSC 357 (McWilliam AsJ) at [16]-[17] and [26].

16    Similarly, I am also satisfied that the principles relevant to the award of costs following the grant of an interlocutory injunction are generally applicable to an award of costs in circumstances where a significant matter of principle is raised in an interlocutory application but the Court, after receiving extensive written and oral submissions from the parties, concludes that it is not a suitable issue to be determined prior to the substantive hearing of the proceeding.

17    Absent disqualifying conduct, the successful party will generally obtain a costs order in its favour even where it has not succeeded on all issues: Smith v Starke, in the matter of Action Paintball Games Pty Ltd (in liq) (No 3) [2016] FCA 40 (Smith) at [10] (Gleeson J); Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 97-8 (McHugh J) and 124 (Kirby J).

18    Where there are multiple issues in a case, the Court will generally not attempt to differentiate between the issues on which a party was successful and those on which it failed. It will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to separate issues upon which a party was successful or unsuccessful: Elite Protective Personnel Pty Ltd & Anor v Salmon (No 2) [2007] NSWCA 373 at [6] (Beazley, McColl and Basten JJA); Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) (2015) 327 ALR 192; [2015] HCA 35 at [5]-[6] (French CJ, Kiefel, Nettle and Gordon JJ); Accor Australia & New Zealand Hospitality Pty Ltd v Liv Pty Ltd (No 2) [2017] FCAFC 110.

19    A court should not too readily disallow costs simply because a party has failed upon an issue, unless it be “quite a separate and distinct issue from the issues in respect of which it succeeded”, or unless there be some element of unreasonableness or inappropriate conduct in relation to that issue: Smith at [11] (Gleeson J), citing Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602 at [54].

20    An approach of delving into the details on an issue by issue basis tends to distract from the principal task of determining an entitlement to costs based on the end result of the litigation: Moroccanoil Israel Ltd v Aldi Foods Pty Ltd (No 2) [2017] FCA 1393 at [64] (Katzmann J).

Submissions

21    The applicant makes three submissions in support of her contention that the Court should make an order that the respondent should be ordered to pay 60% of her costs of and incidental to the hearing of the Interlocutory Application.

22    First, such an order would be consistent with the usual practice of the Court to award costs after the determination of an Interlocutory Application rather than the making of an order that the costs of such an application are to be costs in the cause.

23    Second, the applicant’s proposed costs order reflects the fact that with the exception of the cause of action under s 28G(2) of the SD Act the respondent had not succeeded in having the applicant’s points of claim struck out or summarily dismissed.

24    Third, the applicant’s proposed costs order reflects the fact that significantly more time and attention was directed in both submissions and the judgment to issues other than the s 28G(2) cause of action. The applicant notes that only six of the 126 paragraphs of the respondent’s outline of submissions, only one sub-paragraph of the 38 paragraphs of the respondent’s submissions in reply and only 11 paragraphs of the interlocutory judgment were directed to the contention that the s 28G(2) cause of action should be struck out or summarily dismissed.

25    In addition, the applicant submits that if the Court makes an order in the form of her proposed costs order it should also make an order that the respondent pay her costs in connection with the costs application because the respondent failed to accept her offer in a letter dated 21 February 2022 to accept only 50% of her costs of the Interlocutory Application.

26    The respondent submits that he was ultimately successful but then immediately qualifies that submission by acknowledging that the success was “at least in part”.

27    The respondent submits that he was successful in striking out the s 28G(2) claim and there was a large overlap in the factual matters relevant to that claim and in the other claims in the various claims sought to be advanced by the applicant, in particular the “Pet Statement Conduct”, the “Sexual Proposition Conduct” and the “Sexist Hiring Comments”.

28    The respondent also submits that given the Court determined that the proper construction and effect of s 3(1) of the Australian Human Rights Commission Act 1986 (Cth) (AHRC Act) and s 94 of the SD Act were not appropriate matters to determine on an interlocutory basis, these matters remained “at large” and the work therefore done by the parties in respect of those issues is “neither finalised, nor wasted” and it would therefore be both “premature and impractical” for either party to benefit from a costs order at this stage in respect of that work.

Consideration

29    In order to make a costs order that is consistent with the principles outlined above with respect to the award of costs following the determination of an interlocutory application, it is necessary to determine the extent to which an issue has been determined on a final basis (or at all) and the significance and materiality of any issues upon which an otherwise successful party has not succeeded.

30    As explained above, the usual practice of the Court is not to award costs after the determination of an interlocutory application if the issue or issues the subject of the interlocutory application have not been finally determined.

31    I accept that the amount of attention directed to the s 28G(2) claim was considerably less than the attention directed to the other claims not only in quantitative but also in qualitative terms.

32    I also accept that there was a significant factual overlap between the s 28G(2) claim and the claims advanced by the applicant in its points of claim but, other than the contention that the “Pet Statement Conduct” did not disclose sexual harassment within the meaning of s 28A of the SD Act, no substantive attention was directed at factual matters in the course of the hearing of the Interlocutory Application.

33    Further, I do not consider that it is appropriate to make a proportionate costs order in the present case. The limited success achieved by the respondent with respect to the s 28G(2) claim and the relatively small amount of attention directed at the claim do not warrant a departure from the general rule that a successful party is entitled to its costs without undertaking an issue by issue apportionment of costs. Here, the successful party was the applicant. The respondent failed, except to a limited extent, in its attempt to strike out the points of claim and have the causes of action advanced by the applicant summarily dismissed.

34    More significantly, the principal matter to which attention was directed, the proper construction and effect of s 3(1) of the AHRC Act and s 94 of the SD Act was not determined because it was not an appropriate matter to determine on an interlocutory basis. The extensive work done by both parties in respect of that issue will not be wasted or otherwise “thrown away” if the matter proceeds to a final hearing.

35    It might be thought therefore that the appropriate order, absent an apportionment of costs, would be that the costs of the parties of and incidental to the hearing of the Interlocutory Application be costs in the cause because a significant matter argued was not determined, even on an interlocutory basis, and the respondent had otherwise had some limited success by having a substantive claim struck out and dismissed.

36    Such an order, however, would not reflect that the respondent’s strike out and summary dismissal was in very large part unsuccessful. It could fairly be characterised, given the complexity of the issues raised and the state of the existing authorities, as an application that raised a significant issue that was inherently unsuited for determination on an interlocutory application.

37    In all the circumstances, I therefore conclude that the interests of justice would best be served in this case by an order that the applicant’s costs of and incidental to the hearing of the Interlocutory Application be costs in the cause. It reflects the applicant’s success in largely defeating the respondent’s strike out and summary dismissal claims and recognises that the principal issue agitated in the course of the hearing of the Interlocutory Application has not yet been determined by the Court.

38    Finally, I note that the applicant has not succeeded in persuading the Court that her proposed costs order should be made and therefore the premise of the applicant’s claim that the respondent should pay her costs of her application for costs has not been established.

Disposition

39    The costs order to be made is that the applicant’s costs of and incidental to the hearing of the Interlocutory Application are to be costs in the cause. There will be no order as to the costs incurred by the parties in connection with their respective applications for costs.

Associate:    

Dated:    4 March 2022