Federal Court of Australia

Stillwater Pastoral Company Pty Ltd v Stanwell Corporation Ltd (No 2) [2025] FCA 316

ORDERS

THE COURT ORDERS THAT:

1.    The applicant’s interlocutory application filed on 9 March 2025 be dismissed.

2.    The applicant pay the respondents’ costs of and incidental to the proceeding on the ordinary basis.

3.    The assessment of the respondents’ costs is to be determined by the trial judge on a lump sum basis in accordance with section 4 of the Court’s Costs Practice Note (GPN-COSTS).

4.    Within 28 days of the date of these Orders, the applicant pay the sum of $802,623.26 to the first respondent in satisfaction of its liability for all and any costs arising from Order 4 of the Orders dated 3 November 2022, Order 1(a) of the Orders dated 5 December 2023, and Order 21 of the Orders dated 29 April 2024, together with interest, pursuant to s 52 of the Federal Court of Australia Act 1976 (Cth), at the rate prescribed by r 39.06 of the Federal Court Rules 2011 (Cth) on the constituent sums of:

(a)    $741,478.78 from 19 December 2023;

(b)    $61,144.48 from 13 May 2024.

5.    Within 28 days of the date of these Orders, the applicant pay to the second respondent the amount payable under Order 3 of the Orders dated 8 December 2023, together with interest, pursuant to s 52 of the Federal Court of Australia Act 1976 (Cth), at the rate prescribed by r 39.06 of the Federal Court Rules 2011 (Cth), from 23 December 2023.

6.    Any application for a non-party costs order be filed and served within 60 days of the due date for payment of the costs referred to in Order 2 above.

7.    The parties bear their own costs of and incidental to this application.

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

REASONS FOR JUDGMENT

SARAH C DERRINGTON J:

1    Stillwater Pastoral Company Pty Ltd, on behalf of a class of electricity consumers, prosecuted an Initial Trial in this matter of nine Common Questions directed primarily at determining whether certain conduct alleged to have been engaged in by Stanwell Corporation Ltd and CS Energy Ltd contravened s 46 of the Competition and Consumer Act 2010 (Cth) (CCA). Judgment in the Initial Trial was delivered on 4 December 2024, and found, inter alia, that the alleged contraventions were not established: Stillwater Pastoral Company Pty Ltd v Stanwell Corporation Ltd [2024] FCA 1382 (J). Stillwater filed a notice of appeal from that decision on 28 February 2025. Unless otherwise indicated, capitalised terms in this judgment take their meaning from the corresponding definitions used in the Initial Trial judgment.

2    On 20 March 2025, the parties were heard on the question of costs relating to the Initial Trial. Three questions arise for determination from that hearing. First, whether as sought by Stillwater in its interlocutory application filed on 9 March 2025, costs orders should be stayed until the determination of the appeal. Secondly, whether as urged by both Stanwell and CS Energy, the Court should exercise its discretion to make an order for indemnity costs: on Stanwell’s case either from 26 February 2024 or alternatively from 24 May 2024; on CS Energy’s case from 24 May 2024. Thirdly, what form of assessment should be used in respect of a lump-sum costs order, which all parties agreed was the appropriate form of order. Stillwater did not press paragraph 3 of its interlocutory application, by which it also sought a stay of certain costs orders that had already been made in the respondents’ favour.

3    For the reasons that follow, I decline to exercise the Court’s discretion to order Stillwater to pay costs on an indemnity basis. Further, I am not persuaded that it is appropriate to stay the costs orders pending the determination of the appeal.

The indemnity costs issue

4    There was no dispute as to the principles relevant to the exercise of the Court’s discretion to award indemnity costs. Pursuant to s 43 of the Federal Court of Australia Act 1976 (Cth) (FCA Act), the Court has a broad discretionary power to make orders with respect to costs. It is well understood that the power is not to be exercised arbitrarily but is to be exercised judicially, having regard to relevant principles and the justice of the case in all the circumstances: Les Laboratoires Servier v Apotex Pty Ltd [2016] FCAFC 27; 247 FCR 61 at [305]; Anchorage Capital Partners Pty Limited v ACPA Pty Ltd (No 2) [2018] FCAFC 112 at [22].

5    Two circumstances have been identified by Stanwell and CS Energy as warranting a departure from the usual order as to costs, being that costs are awarded on the “ordinary” basis (see Idenix Pharmaceuticals LLC v Gilead Sciences Pty Ltd (No 2) [2018] FCAFC 7 at [3]), and as justifying the award of costs on the “indemnity” basis. The first, which is relied on by Stanwell only, is the service of proofs of evidence from Stanwell’s traders, together with other evidence, on 26 February 2024, which Stanwell contends revealed the “hopelessness” of Stillwater’s case. The second, which is relied on by both Stanwell and CS Energy, is characterised as Stillwater’s “unreasonable” rejection of the “walk away” offers of compromise made by each of the respondents on 24 May 2024. As to the second point, CS Energy’s argument was slightly more nuanced, being that Stillwater “unreasonably failed to respond” to its offer, rather than relying on a rejection per se. CS Energy’s offer lapsed without response on 7 June 2024. On the other hand, Stillwater rejected Stanwell’s offer by letter dated 1 June 2024. Nothing turns on this difference.

Was Stillwater’s case hopeless?

6    The test for the award of indemnity costs on the basis that a party’s case is hopeless was articulated by Woodward J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 364; 81 ALR 397 in the following terms:

… It is appropriate to consider awarding “solicitor and client” or “indemnity” costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law.

(Emphasis added.)

7    Nevertheless, it is clear that it is not necessary that “a collateral purpose or some species of fraud be established” in order to make out a case for an award of indemnity costs: Colgate-Palmolive Company v Cussons Pty Limited [1993] FCA 801; 46 FCR 225 at 231, citing J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA Branch) (No 2) (1993) 46 IR 301 at 303 per French J.

8    More recently, in Australian Competition and Consumer Commission v Colgate-Palmolive Pty Ltd (No 5) [2021] FCA 246; 151 ACSR 26 at [10], Wigney J identified the circumstances in which indemnity costs have been awarded as including:

… where “the applicant, properly advised, should have known that he had no chance of success”; where the moving party “persists in what should on proper consideration be seen to be a hopeless case”; where the applicant’s case was “always clearly foredoomed to fail” and “they ought to have known this to be so”; where an application is “wholly untenable and misconceived”; and where an applicant persists in prosecuting a proceeding without regard to the evidentiary difficulties in the case.

(Citations omitted.)

9    Stanwell submitted that by no later than 26 February 2024, Stillwater ought to have known that it could not prove its pleaded case. This was said to have been apparent from five matters.

10    First, the diminishing number of impugned trading intervals as the matter proceeded towards trial, commencing with 95,232 and reducing to just 352 overall, of which 108 related to Stanwell and CS Energy together, and of which only 43 related to Stanwell alone, by the date of the Second Further Amended Statement of Claim filed 5 December 2022, should have highlighted to Stillwater that it lacked any reasonable prospects of proving that Stanwell had substantial market power.

11    Secondly, it should have been apparent from its expert’s report dated 21 November 2023 (the Second Ledgerwood Report) that Dr Ledgerwood had analysed Stanwell’s substantial market power in a different market from that which had been pleaded by Stillwater.

12    Thirdly, the service on 26 February 2024 of the proofs of evidence of the two Stanwell traders who would be called to give evidence, in which they stated that they did not deliberately delay making rebids – deliberate delay being an essential component of the pleaded trading strategy.

13    Fourthly, the substantial discovery by Stanwell (over 6,000 documents by 20 September 2022), despite which no document revealed any strategy of deliberately delaying rebids.

14    Fifthly, the expert evidence filed on behalf of Stanwell by 28 February 2024, which showed that all Generators engaged in the same conduct as that impugned against Stanwell, ought to have revealed the tenuous nature of the critical allegation of taking advantage of the alleged substantial market power.

15    Although Stillwater failed to substantiate its allegations after a trial which spanned almost eight weeks, that goes nowhere near a conclusion that Stillwater, properly advised, persisted with a hopeless case. As described in the judgment, at [96], the Court was being asked at the Initial Trial to apply the principles of Australian competition law in the unique context of the National Electricity Market (NEM). Stillwater submits, correctly with respect, that no proceedings of an analogous kind have been determined previously by a court, and so the case was necessarily based upon an unsettled state of the law and without an established evidential method for proving the facts. The unique characteristics of the NEM factored significantly in the opinions expressed by each of the expert witnesses who testified at the Initial Trial. It was those very features that led to the opinions of Dr Ledgerwood on which Stillwater’s case largely depended. The fact that they were found to be unpersuasive at trial does not detract from the proposition that he posited an economic theory in relation to what he described as “conduct cases” which may have been useful to Stillwater in establishing the alleged contraventions of s 46 of the CCA. The metes and bounds of that theory, particularly in relation to the identification of the impugned trading intervals, remained to be tested at trial. The diminishing number of impugned trading intervals could not be said, on its own, to have rendered Stillwater’s prospects hopeless.

16    Similarly, Stillwater ought not be criticised for persisting in the face of confusing evidence on the part of Dr Ledgerwood as to the true scope of the market. As matters transpired, three different markets were posited by participants in the Economic Conclave (J at [168]). In oral evidence, Dr Ledgerwood in fact resiled from the opinion he had expressed in the Second Ledgerwood Report that the market comprised “each of the 9,211 dispatch intervals within the Conduct Period where the QRNEM was a separate market” (J at [191]).

17    It is also, with respect, unreasonable to criticise Stillwater for continuing to prosecute its case despite the proofs of evidence from two Stanwell traders with which it had been served and despite there being no contemporaneous document discovered which evidenced the alleged trading strategy. No party is expected to accept the unchallenged testimony of a witness for another party as proof that their case is hopeless. That is the very purpose of cross-examination and the trial process. Stillwater was entitled to test that evidence, and to put to the traders the possibility of the existence of the alleged trading strategy despite the absence of any discovered document tending to prove it.

18    Similarly, it was not unreasonable for Stillwater to persist with its case after Stanwell had filed and served its expert evidence on 26 February 2024 and 28 February 2024. The Expert Conclaves had not yet taken place – the reports of the Economic Conclave and the Electricity Market Conclave were not completed until 26 April 2024 and 29 April 2024, respectively.

19    Stanwell’s submission that it is appropriate to award costs on an indemnity basis because Stillwater persisted in the prosecution of a hopeless case after 26 February 2024 must be rejected.

Was the rejection of the offers unreasonable?

20    It is well established that an unreasonable rejection of an offer to compromise, including a Calderbank letter (i.e. a letter of offer in accordance with the principles in Calderbank v Calderbank [1976] Fam 93; [1975] 3 All ER 333) made outside the provisions of Pt 25 of the Federal Court Rules 2011 (Cth), is a special or unusual feature which may justify an award of costs on the indemnity basis: Colgate-Palmolive at 233; Karpik v Carnival plc (The Ruby Princess) (Common Questions and Costs) [2024] FCA 57 at [8]-[10].

21    The test for whether indemnity costs should flow from the rejection of an offer of compromise was explained by Beach J in State Street Global Advisors Trust Company v Maurice Blackburn Pty Ltd (No 3) [2021] FCA 568 at [38] to be “whether, given the information then available to the offeree, it should have known that its case was likely to fail”. Although the assessment of unreasonableness involves a broad ranging inquiry, that inquiry must be focussed on the circumstances that existed at the time when the offer was rejected: Anchorage Capital Partners at [6].

22    In Anchorage Capital Partners at [7], the Full Court identified as relevant to assessing unreasonableness in this context: (a) the stage of the proceeding at which the offer was received; (b) the time allowed to the offeree to consider the offer; (c) the extent of the compromise offered; (d) the offeree’s prospects of success, assessed as at the date of the offer; (e) the clarity with which the terms of the offer were expressed; and (f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree rejecting it.

23    The offers of compromise in the present case had the following relevant features: each was made on 24 May 2024, 10 days before the commencement of the hearing of the Initial Trial on 3 June 2024; each set out the costs incurred to date (Stanwell “in excess of $12M”, CS Energy “in excess of $17,000,000”); each estimated the respective respondent’s likely further costs of the Initial Trial (Stanwell “in excess of $5M”, CS Energy “approximately $4 million”); each noted the quantum of the existing costs orders in its favour (Stanwell “$799,623.37”, CS Energy “$2,350,000”); each respondent offered to bear their own costs of the proceedings, not to enforce any existing costs order against Stillwater, and to waive any entitlement to the security for costs in the sum of $8,050,000 provided in four tranches between October 2021 and April 2024; each was expressed to be open for 14 days; each explained the reasons why it was said to be unreasonable for Stillwater to reject (or to refuse to accept) the offer; and each foreshadowed an application for indemnity costs in the event the offer was rejected and Stillwater was unsuccessful at the Initial Trial.

24    It can be observed that the terms of the offers were clear, and that an application for indemnity costs had been foreshadowed by each respondent.

25    The timing of the offer in the present case might be seen as something of a double-edged sword. On the one hand, the making of an offer just prior to the commencement of a complex trial can be problematic, particularly if used “as an indiscriminately wielded tactical weapon” (Igo Mischel (as Executor of the Estate of Maria Mischel) v Mischel Holdings Pty Ltd (in liq) (No 2) [2012] VSC 421 at [28] per Croft J, citing Maclean v Rottnest Island Authority [2001] WASCA 323 at [36] per Wallwork, McKechnie JJ and Einfeld AJ). On the other hand, the proceeding needs to be sufficiently progressed to allow the offeree to properly consider the offer of compromise. In the present case, the expert witnesses had by the time of the offers attended the conclaves and prepared their joint reports (by the end of April 2024), a mediation had occurred (on 23 March 2024), and Stillwater had filed its opening submissions (on 16 May 2024). Although courts are loathe to discourage parties from making genuine offers to settle at any time, there is understandable reluctance to encourage parties to engage in what Bryson JA described as a “disruptive stratagem”: De Groot v Nominal Defendant [2005] NSWCA 61 at [261], albeit in that case the trial was underway.

26    Stillwater submits that although made 10 days prior to trial, the offers were made at “a most inopportune and disruptive time” when there was really only one person who would be able properly to consider the offer, leading Counsel, at a time when that very person was in the midst of deep preparation for trial. These matters were explained in the Affidavit of Mr Greg Whyte sworn 7 March 2025 (Eighth Whyte Affidavit) at [63(c)] and [65]. For much the same reasons, Stillwater submitted that 10 days was insufficient time to properly consider the offers. Similarly, in Maclean, the Court of Appeal referred to the undesirability of delivering a Calderbank letter “shortly before trial when the other party might reasonably be expected to have their minds on a number of matters” (at [36]).

27    Whilst I have some considerable sympathy for the burden shouldered by leading Counsel, I bear in mind that Stillwater’s legal team comprised five Counsel instructed by one of Australia’s leading commercial law firms.

28    Stillwater also pointed to the fact that the proceeding is a class action as being an additional factor which constrained its response. As Stillwater rightly submitted, any proposed settlement would have required the approval of the Court pursuant to s 33V of the FCA Act and in compliance with the Class Actions Practice Note (GPN-CA) at [14.1]. In practical terms, given the several procedural steps which are required to obtain such approval, that would have meant vacating the trial dates. The Full Court remarked on the difficulties arising in the context of settling class actions in Belconnen Lakeview Pty Ltd v Lloyd (No 2) [2021] FCAFC 218 at [23]:

… Further, from a practical perspective, even if there had been an in-principle settlement, it would have taken some time (most likely in the order of four months) to prepare a notice to group members, have this approved, dispatch the notices, give group members time to consider the proposed settlement, and seek Court approval. It would have been necessary to vacate the trial date while this occurred. If the in-principle settlement fell through, this would have led to considerable delay, inefficiency and cost.

29    This raises the question as to whether an offer to compromise the entirety of a representative proceeding and, by that offer, take advantage of the costs consequences in the event the offer is rejected, but not improved upon, following the ultimate determination of the proceeding, is ever really available to respondents in such proceedings.

30    In McMullin v ICI Australia Operations Pty Ltd [1997] FCA 1426, having lost on liability, the respondents asked the trial judge to refrain from making a costs order until all of the damages claims had been assessed, in case the amount turned out to be lower than the offer to the applicants prior to the commencement of the liability hearing. In declining to do so, Wilcox J said:

Prior to the incurring of major costs, a respondent often makes an offer to the applicant, “without prejudice except as to costs”. The idea is that, if the applicant ends up with a less beneficial result, the respondent may be able to resist an adverse order for costs - or even conceivably obtain a favourable order - by establishing the applicant has not succeeded in beating the offer.

There is no problem about that approach in ordinary litigation, but I think it presents a major problem in relation to a representative proceeding under Pt IVA of the Federal Court of Australia Act 1976, especially where there are unidentified group members. Section 33V(1) of the Act provides:

“A representative proceeding may not be settled or discontinued without the approval of the Court.”

If the offer made to Mr and Mrs McMullin last March had attracted them, and they had applied for approval of the settlement, or discontinuance of the proceeding in order to give effect to the terms of the offer, I would have been unable to deal with the application until I had information regarding the identity of the group members and the likely value of their claims. I would not have been prepared to approve a monetary settlement without having some idea whether this represented fair value, from the point of view of group members; in other words, whether the amount that individual group members would receive reasonably reflected the hazards of their claims. Counsel for the applicants would not have been able to provide the necessary information without proceeding with the case.

(Emphasis added.)

31    As Counsel for the respondents in that case had observed in argument, the consequence of the approval process in the context of an offer of compromise is serious from a respondent’s point of view. They may be deprived of a major method of resolving litigation.

32    After referring to that passage in McMullin, Moore J in King v AG Australia Holdings Ltd [2002] FCA 872; 121 FCR 480 at [54]-[55] observed that “a rejected offer to settle the entire proceeding might not give respondents quite the same comfort as in ordinary litigation when issues of costs are considered …”.

33    In Brookfield Multiplex Limited v International Litigation Funding Partners Pte Ltd (No 4) [2009] FCA 803, Finkelstein J did not advert to any particular distinction between the approach to offers of compromise in “ordinary” litigation as compared with representative proceedings. In that case, at [14], his Honour refused an application for indemnity costs subsequent upon a “walk away” offer having been made 12 days after the last appearance was filed on the basis that it did “not involve any real give and take”.

34    Although representative proceedings present some additional challenges for respondents, it cannot be the case that the capacity to make use of an offer of compromise to resolve an entire representative proceeding is simply unavailable. In each case, it will necessarily depend on the same range of factors considered in “ordinary” litigation, albeit that the reasonableness of rejecting an offer of compromise will be assessed against the additional factors which are peculiar to representative proceedings. In this case, that includes assessing whether or not Stillwater, who prepared for trial for close to four years and who, together with its lawyers and litigation funder, made an assessment of its prospects, unreasonably rejected to compromise the entire proceeding, when to do so would have aborted an eight-week trial without any certainty as to whether the proposed settlement would receive the approval of the Court.

35    The extent of the compromise offered by Stanwell and CS Energy, and Stillwater’s prospects of success, are closely linked. In Seven Network Limited v News Limited [2007] FCA 1489, Sackville J said, at [68]:

… both the reasonableness of an offer and the unreasonableness or otherwise of its rejection must depend in part on the applicant’s prospects, not only of succeeding on liability, but of obtaining the relief it seeks. In particular, where the applicant claims many millions of dollars in damages – indeed, in this case, many hundreds of millions of dollars – the reasonableness of an offer to compromise for a given sum must depend not only on the applicant’s prospects on liability, but also its chances of recovering damages in an amount substantially in excess of the sum incorporated in the offer of compromise.

36    Stillwater quite properly accepted that there can be cases where a “walk away” offer attracts the Calderbank principles where it would have been unreasonable for an applicant not to have accepted it, citing by way of example Leichhardt Municipal Council v Green [2004] NSWCA 341, Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd [2011] FCAFC 53, and Rickard Constructions v Rickard Hails Moretti [2005] NSWSC 481. It submitted, however, that this is not such a case for the following reasons.

37    First, the claim was a class action brought on behalf of a very large number of consumers of an essential commodity, electricity. There was therefore a public interest component to the case, especially since the Regulator had in the past raised issues about the conduct of certain Generators, although had never singled out Stanwell nor CS Energy. This is not a matter on which I place great weight. True it is that courts have emphasised the public dimension as relevant to the exercise of the costs discretion in certain cases: see for example McNickle v Huntsman Chemical Company Australia Pty Ltd (Costs) [2024] FCA 883 at [65] and [67] and Brookfield Multiplex. In the latter case, the Court said, at [15] that it was “in the public interest that the issue [i.e. the legality of litigation funders’ funding technique] be resolved, one way or another”.

38    The present case is different. The alleged conduct on the part of Stanwell and CS Energy was said to have occurred during the Conduct Period of 1 January 2012 to 6 June 2017. The conduct which was said to have occurred during the Conduct Period had ceased long before the commencement of the proceeding, consequent upon amendments to the National Electricity Rules after 1 July 2016 and, on 6 June 2017, a Ministerial Direction to Stanwell under s 257 of the Electricity Act 1994 (Qld) which restricted the maximum price of its rebids (J at [3]). Thus, to the extent that there was any public interest attached to the cessation of the impugned conduct, the public interest has been fulfilled. What remained was a claim for financial redress only by those consumers who, it is alleged, were overcharged during the Conduct Period because of the impugned conduct.

39    Secondly, at the time when the offers of compromise were received, the outcome of the trial depended on unresolved questions of law about which reasonable minds may differ. Stanwell and CS Energy refuted that submission on the basis that the legal principles relevant to contravention of s 46 of the CCA, being the relevant legal basis of the claim, were well-settled. So much may be accepted. Nevertheless, as I have already observed, the unique factual context of the proceeding made the application of those principles challenging and so, to that extent, it was reasonable to assert that there was uncertainty about the manner in which the trial would resolve. Further, as I have said, the factual and expert evidence remained to be tested, and findings of credit necessarily needed to be made.

40    Further, Stillwater submitted that independent advice had been sought about the quantum of the claim, which advice indicated it could be in the vicinity of $600 million. Stanwell and CS Energy submitted that this advice had been based on unsustainable assumptions and, in any event, was of little relevance if liability could not be established. One such assumption was that “one or both of the Respondents’ Short-notice Rebidding caused the spot price to increase in the 353 ATIS” (Eighth Whyte Affidavit, Mediation Quantum Report at [7]). Causation was not something about which evidence was led at the Initial Trial, the scope of which was confined to the question of contravention (J at [5]). Dr Ledgerwood said that he did not analyse whether the timing of the relevant respondent’s impugned rebid caused the observed price spike because it was a “limitless task” (J at [408]).

41    Looking at the matter at the time when the offers of compromise were made, and accepting that Stillwater reasonably considered it had prospects of success at trial, the offers, which I accept were genuine offers involving some tangible “give and take” on the part of the respondents, did not come close to the potential quantum identified in the Mediation Quantum Report, and presumably which had been communicated to the class members. As Stillwater submitted, acceptance of the offers would have resulted in there being no return to the class members at all. In that context, it was not unreasonable for it to reject offers that would have been unlikely to receive Court approval.

42    For these reasons, and despite its loss at the Initial Trial, it is not appropriate to award costs on an indemnity basis against Stillwater because of its rejection of the respondents’ offers of compromise dated 24 May 2024.

The stay issue

43    Stillwater by its interlocutory application filed 9 March 2025 seeks a stay of the assessment and enforcement of costs in circumstances where it has filed a notice of appeal against my decision on the Initial Trial. Stillwater accepts that the lodging of an appeal is not of itself sufficient for the grant of a stay but submits that, in this case, the size of the assessment to be conducted means that significant costs are likely to be wasted in the event that it succeeds in whole or in part on appeal.

44    Three factors are relevant to the question of whether a stay ought to be granted. The first is whether there is an arguable point on the proposed appeal (Nolten v Groeneveld Australia Pty Ltd [2011] FCA 1494 at [24]) or some rational prospect of success in relation to any ground of appeal (Burns v AMP Finance Ltd [2005] FCA 761 at [5]). The second is whether a stay would avoid detriment in the event the appeal is successful. The third is whether a stay would cause detriment in the event the appeal is unsuccessful.

45    As to the first factor, the notice of appeal raises 10 grounds of appeal. I accept Stillwater’s characterisation that the grounds arise in the context of novel and complex representative proceedings. Stanwell accepts, for the purposes of the application for a stay only, that the appeal is arguable. I agree.

46    Turning to the second and third factors, CS Energy submitted that if a stay were to be granted, it should be on terms that protect the position of the respondents. By this submission, CS Energy asks the Court to weigh the possibility of wasted costs should the assessment proceed now and the appeal succeed, against the prejudice to the respondents of being kept out of the payment of costs should the appeal ultimately fail. Stanwell submitted that a stay of the assessment until the conclusion of the appeal would provide Stillwater with “a windfall benefit of several million dollars”.

47    Stanwell submitted further that an additional source of prejudice arises from the possibility that the litigation funder’s financial position may deteriorate between now and the conclusion of the appeal. It observed in this regard that despite seeking the indulgence of a stay, Stillwater has not offered any additional security. Stanwell submitted that a stay should only be granted if an undertaking were given by the Funder to pay any costs assessed in favour of the respondents, together with interest at the prescribed Court rate (10.35%) for the duration of any stay, such undertaking to be supported by appropriate security (such as a bank guarantee) or an undertaking to the Court from the Funder’s ultimate holding company.

48    Stillwater submitted that there was no sure foundation for Stanwell’s concern about recoverability, particularly in circumstances where it has already provided $16 million by way of security to date and where neither respondent has applied for that amount to be increased to address any perceived shortfall. I am not persuaded that there is a real risk that the respondents would be unable to recover any costs award.

49    The real prejudice arises from the loss of interest which would otherwise continue to accrue, in circumstances where it is likely to take at least 18 months for the appeal to be finalised. Stanwell assessed the likely prejudice to it as being in the order of $2.3-$3.1 million, based on its “ball park” assessment of its recoverable costs to date of $15-$20 million. I accept that CS Energy’s likely prejudice is similar.

50    The question of how to mitigate such a risk is not straightforward. Unlike the position in the Supreme Court of New South Wales, there is no power in this Court to order that interest be payable on a costs judgment (or a future costs judgment) from a date preceding the entry of the costs judgment. Section 52(1) of the FCA Act provides that a judgment debt carries interest from the date on which the judgment is entered. In New South Wales, a judgment carries interest from the date “on which it takes effect” (Civil Procedure Act 2005 (NSW) s 101(2)). That date can be expressly varied to such date as the Court may order pursuant to rule 36.4 of the Uniform Civil Procedure Rules 2005 (NSW): Gacic v John Fairfax Publications Pty Ltd [2015] NSWCA 99; 89 NSWLR 538 at [51]-[52], [144]-[153] per McColl JA (Macfarlan JA and Barrett JA agreeing).

51    In Flower and Hart (a Firm) v White Industries (Qld) Pty Ltd [2001] FCA 370; 109 FCR 280, the Full Court held, at [45], that s 43 of the FCA Act does not extend to authorising the ordering of interest on costs and, at [63]-[64], that the power to order pre-judgment interest pursuant to s 51A of the FCA Act does not extend to awarding interest on costs. Further, in Elsinora Global Ltd v Deputy Commissioner of Taxation [2006] FCAFC 156; 155 FCR 413 at [74], the Full Court considered that neither s 22 nor s 23 of the FCA Act empowers the Court to make an order for the award of interest when it is not empowered to do so under s 51A or under the general law.

52    Stillwater submitted that the absence of power for the Court to order that interest be payable on a costs judgment from an earlier date does not “serve to highlight” any prejudice, as had been submitted by CS Energy. I agree. It does, nonetheless, make it more difficult to mitigate the risk that Stillwater may obtain a windfall benefit, in the event it loses on the appeal, which will be of a significantly higher order of magnitude than the costs that may be wasted by an immediate costs assessment should Stillwater succeed on appeal.

53    In the circumstances, I consider that the likely prejudice to Stanwell and CS Energy in the event that the appeal is unsuccessful outweighs the potential wasted costs of an assessment of the trial costs in the event that the appeal succeeds. For that reason, I do not consider it an appropriate exercise of the Court’s discretion to order a stay of the assessment and payment of the costs of the proceeding.

The assessment issue

54    The parties agree that the respondents’ costs should be assessed by way of a lump sum assessment, but disagree as to whether this assessment should be done by the previously appointed expert who conducted the assessment of the costs thrown away by the amendment to the statement of claim, or by a Registrar of the Court. Stillwater preferred that it be done by a Registrar. Stanwell was somewhat ambivalent. CS Energy urged that I keep control of the assessment of costs, particularly given the complexity of the matter and my knowledge of it as the trial judge: Frigger v Trenfield (No 11) [2022] FCA 326 at [76], [80].

55    As unattractive as CS Energy’s submission may be, there is force in adopting a process that avoids, as far as possible, satellite litigation which may involve a de novo review of a Registrar’s assessment pursuant to s 35A(5) of the FCA Act. For that reason, I will accede to the submission and will appoint a Registrar to assist me with the assessment of costs pursuant to paragraph 4.9 of the Costs Practice Note (GPN-COSTS).

Disposition

56    For these reasons, Stillwater’s interlocutory application must be dismissed. I will make orders that Stillwater pay Stanwell’s and CS Energy’s costs of the proceeding on the ordinary basis, which amounts I will determine on a lump sum basis, assisted by a Registrar in accordance with section 4 of GPN-COSTS. I will also make orders for the payment of the previously made costs orders within 28 days of the date of these orders, together with interest at the prescribed rate.

57    Any application for a non-party costs order should be filed and served within 60 days of the due date for the payment of the lump sum costs order.

58    There having been some success on either side of this application, it is appropriate to order that the parties bear their own costs of and incidental to the application.

Associate:

Dated:    7 April 2025