Federal Court of Australia

Sunflower Care Services Pty Ltd v Commissioner of the NDIS Quality and Safeguards Commission (Costs) [2026] FCA 261

ORDERS

THE COURT ORDERS THAT:

1.    There be no order as to the costs of the hearing of the application for interlocutory relief reserved in paragraph 4 of the orders made on 5 June 2024.

2.    The applicants pay the respondent’s costs of the interlocutory application filed on 24 June 2024 reserved in paragraph 2 of the orders made on 21 November 2025 to be fixed in a lump sum.

3.    The respondent pay the applicants’ costs of the interlocutory application filed on 20 November 2024 reserved in paragraph 6 of the orders made on 21 November 2025 to be fixed in a lump sum.

4.    There be no order as to the first applicant’s costs of the proceeding.

5.    The respondent pay 80% of the second applicant’s costs of the proceeding, including any reserved costs except those referred to in paragraphs 1 to 3 of these orders, to be fixed in a lump sum.

6.    By 4.30pm (AWST) on 26 March 2026 the applicants:

(a)    file a minute of proposed consent orders determining the amount in which to fix the lump sum costs referred to in paragraphs 2, 3 and 5 of these orders; alternatively

(b)    file and serve a minute of proposed orders determining the amount in which to fix the lump sum costs referred to in paragraphs 2, 3 and 5 of these orders together with a costs summary prepared in accordance with Costs Practice Note (GPN-COSTS).

7.    If paragraph 6(b) of these orders is applicable, by 4.30pm (AWST) on 9 April 2026, the respondent file and serve a minute of proposed orders determining the amount in which to fix the lump sum costs referred to in paragraphs 2, 3 and 5 of these orders together with a costs response prepared in accordance with Costs Practice Note (GPN-COSTS).

8.    The amount in which to fix the lump sum costs referred to in paragraphs 2, 3 and 5 of these orders be referred to the Registrar for determination.

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

REASONS FOR JUDGMENT

FEUTRILL J:

Introduction

1    On 21 November 2025 orders were made on various interlocutory applications and the originating process with costs reserved: Sunflower Care Services Pty Ltd v Commissioner of the NDIS Quality and Safeguards Commission (No 2) [2025] FCA 1442. The parties were ordered to file and serve minutes of proposed orders with respect to the costs reserved and submissions in support which they have done. As contemplated in the orders made on 21 November 2025, orders on the costs reserved were made today without further oral hearing under s 20A of the Federal Court of Australia Act 1976 (Cth). These are the reasons for those orders.

2    The applicants in the proceeding were Sunflower and Mrs Karunarathna. Although there was a single originating process filed and the claims of Sunflower and Mrs Karunarthna were related and arose out of similar facts, the decisions of the Commissioner under review in the proceeding were distinct as was the relief sought against the Commissioner. Therefore, in point of detail, Sunflower and Mrs Karunarathna made separate claims for constitutional writs under s 39B of the Judiciary Act 1903 (Cth) and relief under s 16 of the Administrative Decisions (Judicial Review) Act 1977 (Cth). The actual merits of Sunflower’s grounds of review were not determined and many of Mrs Karunarathna’s grounds of review were unsuccessful, superseded by subsequent events, or unnecessary to determine. The Commissioner submits that, in these circumstances, the appropriate order is that each party should bear that party’s own costs or the Commissioner should pay 25% of Mrs Karunarathna’s costs. The applicants submit that the appropriate order is that the Commissioner pay their costs of, and incidental to, the proceedings including all reserved costs.

3    It follows that the issue the parties raise in their submissions is whether the usual order that ‘costs follow the event’ is appropriate in the circumstances of this proceeding. Depending on the resolution of that issue, a subsidiary issue is whether costs should be taxed or fixed in a lump sum.

Should the Commissioner pay all or any of the applicants’ costs?

Applicable principles

4    Section 43 of the Federal Court Act confers discretionary power on the Court to award costs. While the discretion is unconstrained by legal rule, it is to be exercised judicially and, in general, in accordance with settled principles that avoid arbitrariness and serve the need for consistency: Harvard Nominees Pty Ltd v Dimension Agriculture Pty Ltd (in liq) [2023] FCAFC 140; 299 FCR 224 at [15]. Relevantly, the settled principles may be summarised as follows.

(1)    The ‘usual rule’ is that costs follow the event: Ruddock v Vadarlis (No 2) [2001] FCA 1865; 115 FCR 229 at [11]-[12] (Black CJ and French J). Although the meaning of ‘event’ may be contestable, in this Court the expression ‘costs follow the event’ has been used to describe an award of costs based on the overall outcome, rather than success or failure on individual issues or claims: Queensland North Australia Pty Ltd v Takeovers Panel (No 2) [2015] FCAFC 128; 236 FCR 370 at [9]-[18] (Dowsett, Middleton and Gilmour JJ).

(2)    There are at least three categories of situation in which the party that is successful overall may be deprived of costs, or even ordered to pay the costs of the other party or parties. First, where the successful party has only been partially successful in terms of the relief claimed. Second, where the successful party has obtained the claimed relief, but has not succeeded on all bases (factual or legal) upon which it claimed that relief. Third, the conduct of the successful party has contributed in some way to the parties incurring unnecessary costs. Of course, these categories may overlap: Queensland North Australia at [11]. ‘Within the general discretion to award costs, costs may be refused where, for example, the applicant has made an exaggerated claim which has occupied a significant proportion of the proceedings and has succeeded only on a minor aspect of its original claim.’ Also, the Court ‘may award only a proportion of the successful party’s costs if the conduct of that party at trial was such as to unreasonably prolong the proceedings’: Ruddock v Vadarlis (No 2) at [15]. See, also, Sandvik Intellectual Property AB v Quarry Mining & Construction Equipment Pty Ltd (No 2) [2017] FCAFC 158 at [9]-[11] (Greenwood, Rares and Moshinsky JJ); Fanatics LLC v FanFirm Pty Ltd (Costs) [2025] FCAFC 111 at [5]-[7], [9] (Burley, Jackson and Downes JJ).

(3)    Where there has been no adjudication on the merits, depending on the circumstances, it may be appropriate to make no order as to costs: Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; 186 CLR 622 at 624-625 (McHugh J). But, it will rarely, if ever, be appropriate for the Court to undertake a hypothetical determination of the merits to decide which party is notionally the successful party in the proceeding. The Court may take into account whether the applicant acted reasonably in commencing and the respondent acted reasonably in defending the proceeding. Conduct of the respondent before the commencement of the proceeding may be taken into account. The Court may also take into account that interlocutory relief has been granted: Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 at 201 (Hill J). See, also, Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd (No 3) [2006] FCA 1023 at [17] (Goldberg J).

The costs of Sunflower Care Services’ application

5    For the reasons given in Sunflower (No 2) (at [27]-[56]), it was unnecessary to determine the merits of Sunflower’s claims in the proceeding and undertakings that the Commissioner proffered had the effect of giving Sunflower the final relief for a permanent injunction it had claimed. Nonetheless, Sunflower pressed for a hearing and final determination of the merits of its application and an interlocutory application to expand its grounds of review. Although successful in one sense, in that the undertakings had the effect of final relief, Sunflower’s conduct after the undertakings were proffered had the effect of unnecessarily prolonging the first final hearing and, because the Commissioner consented to Mrs Karunarathna’s further amendments, unnecessarily requiring a hearing and determination of Sunflower’s interlocutory application to further amend the originating process.

6    The applicants submit that notwithstanding these matters, having regard to the effect of the Commissioner’s undertakings and that earlier in the proceeding, after a contested interlocutory hearing, an interlocutory injunction was made restraining the Commissioner from taking certain steps, the Court could feel confident that Sunflower was almost certain to have succeeded if the matter had been fully determined.

7    In circumstances in which a banning order had been made against Mr Karunarathna and, although the banning order against Mrs Karunarathna was under challenge, Mrs Karunarathna had given undertakings in equivalent terms to the banning order, and another person was the director of Sunflower, the Commissioner may have decided that it was not necessary, at that time, to continue with the process that had been commenced to consider suspension or cancellation of Sunflower’s registration or making a banning order against Sunflower. Therefore, the Commissioner’s willingness to proffer undertakings does not necessarily reflect a view that Sunflower’s application would have inevitably succeeded.

8    Sunflower acted reasonably initiating the proceeding, but its conduct unnecessarily prolonged the first final hearing on 27 June 2024. The subsequent hearings on 16 September 2024, 24 October 2024 and 7 March 2025 were all primarily concerned with Mrs Karunarathna’s application. The Commissioner acted reasonably defending the proceeding and proffering undertakings. The interlocutory injunction granted on 5 June 2024 did not have the effect of determining the proceeding in Sunflower’s favour. Although there was a serious question to be tried and the Commissioner’s later undertakings coupled with the passage of time rendered her opposition to the grant of a final injunction moot, it is not a case where it can confidently be said that Sunflower would ultimately have succeeded if there had been a final determination of Sunflower’s grounds of review. Further, there is a significant public interest in parties acting consistently with their duty to narrow the issues in dispute. Awarding costs against a party that has conformed with that duty on the ground that it has ‘capitulated’, as the applicants submit, threatens to undermine that public interest and discourage parties from narrowing issues for fear of an adverse costs order. For all these reasons, the appropriate order is that there be no order as to Sunflower’s costs of the proceeding.

9    As for the costs of the interlocutory application filed on 24 June 2024, the Commissioner consented to the further amendments that related to Mrs Karunarathna. Sunflower was unsuccessful in its attempt to have further amendments made to its grounds of review. The appropriate order is that the applicants pay the Commissioner’s costs of that application.

10    The costs of the application for interlocutory injunctions were also reserved in the orders made on 5 June 2024. The applicants submit, correctly, that the usual order on such an application is that the costs be in the cause: e.g., Perdaman Chemicals and Fertilisers Pty Ltd v Griffin Coal Mining Company Pty Ltd (No 3) [2011] WASCA 203 at [11] (Martin CJ, Newnes and Murphy JJA). As mentioned, an interlocutory injunction was granted in favour of Sunflower after a contested hearing, but for the reasons already given, there should be no order of the costs of the grant of that injunction in the cause. Therefore, the appropriate order on that application is that there be no order as to Sunflower’s costs of the application.

The costs of Mrs Karunarathna’s application

11    In substance, ultimately, Mrs Karunarathna prosecuted two separate applications for judicial review. The first application related to the banning order made on 3 May 2024. The second application related to the amended banning order made on 5 August 2024. See, Sunflower (No 2) at [102]-[120].

12    The costs of the proceeding up to the hearing on 24 October 2024 related to the first application. As a consequence of the amended banning order many of Mrs Karunarthna’s grounds of review became moot after the first final hearing on 27 June 2024, but the first application was not futile: Sunflower (No 2) at [57]-[84]. Ultimately, Mrs Karunarathna was successful in obtaining a writ of certiorari to quash the banning order made on 3 May 2024 on one ground of review that was addressed at the hearing on 27 June 2024: Sunflower (No 2) at [121]-[142]. The other grounds of the first application were not necessary to decide because the amended banning order was made after the hearing on 27 June 2024. However, the Commissioner’s application to re-open to argue that the first application should be dismissed because it was futile was unsuccessful and had the effect of prolonging the proceeding.

13    The costs of the proceeding after 24 October 2024 related to the second application. Mrs Karunarathna was successful in obtaining a writ of certiorari to quash the amended banning order on two substantive grounds: Sunflower (No 2) at [121]-[142], [143]-[209]. The remaining grounds were not successful: Sunflower (No 2) at [210]-[231].

14    There is no reason that Mrs Karunarathna should be denied the costs of prosecuting the grounds of the first application that became unnecessary to decide as result of the amended banning order. Further, after the amended banning order was made, the Commissioner successfully applied to re-open and raise arguments of substantial complexity that failed and resulted in two further hearings that could have been avoided. Therefore, in these circumstances, while Mrs Karunarathna only succeeded on part of her first application, her conduct was not of the kind that disentitled her to the usual order that costs follow the event.

15    As for the second application, Mrs Karunarathna succeeded on a relatively straightforward ground based on construction of the amended banning order and the National Disability Insurance Scheme Act 2023 (Cth). The other ground upon which she succeeded was less straight-forward but also largely turned on statutory construction and the reasons for the decision to make the amended banning order. All other grounds that Mrs Karunarathna added as part of the second application were not successful. These grounds introduced factual and legal complexity on issues of marginal merit. Regarding these issues, it is not appropriate that the Commissioner bear the full cost of Mrs Karunarathna prosecuting them because the merit and importance of these issues was out of proportion with the complexity of the issues raised and the time and effort required to deal with them in the proceeding.

16    Taking all the foregoing matters into account, the appropriate order is that the Commissioner pay 80% of Mrs Karunarathna’s costs of the proceeding. The costs awarded to Mrs Karunarathna have been apportioned in part due to the introduction of complex issues of little importance and merit and in part in recognition that Mrs Karunarathna is a joint applicant with Sunflower and there should be no order as to Sunflower’s costs of the proceeding.

17    For the reasons already given, the applicants should pay the Commissioner’s costs of the interlocutory application filed on 24 June 2024 (leave to further amend the originating process). As for the interlocutory application filed 24 November 2024 (leave to re-open and further-further amend the originating process), there is no reason that costs should not follow the event of that application even though the applicants were not completely successful in terms of the grounds of review and relief that they sought to add to the originating process. The appropriate order is that the Commissioner pay the applicants’ costs of that application.

18    As for the application for interlocutory injunctions, although an order was made in favour of Mrs Karunarathna on 5 June 2024 suspending the operation of the banning order made on 3 May 2024, that order was made by consent because Mrs Karunarathna gave an undertaking, in effect, equivalent to the banning order: Sunflower Care Services Pty Ltd v Commissioner of the NDIS Quality and Safeguards Commission [2024] FCA 589 at [45]. While it is usual for the costs of such an application to be in the cause and Mrs Karunarathna has been successful in the cause, the Commissioner dealt with her application for an interlocutory injunction in a manner that reduced the issues in dispute on that application and the need for the Court to adjudicate on them. Again, there is a public interest in encouraging litigants to reduce issues in dispute. The appropriate order is that there be no order as to Mrs Karunarathna’s costs of that application.

Should costs be determined on a lump sum basis?

19    The power to award costs on a lump sum basis and the guidance on the exercise of that power set out in Central Practice Note: National Court Framework and Case Management (CPN-1) and the Costs Practice Note (GPN-COSTS) were considered in Paciocco v Australia and New Zealand Banking Group Ltd (No 2) [2017] FCAFC 146; 253 FCR 403 at [13]-[20] (Allsop CJ, Besanko and Middleton JJ). As the Full Court there explained, the Court’s preference, in general, wherever it is practicable and appropriate to do so, is to make a lump sum costs order so as to finalise costs and avoid potentially expensive and lengthy taxation hearings. The Court should now proceed on the basis that taxation ‘should be the exception’ and confined to matters which are unable to be determined otherwise. The guiding principles are to reduce delay and cost when quantifying costs.

20    The costs in this proceeding and the interlocutory applications are suited to a lump sum costs order. That sum will be capable of determination relatively quickly upon the provision of submissions and supporting materials to the Court. There will be an order that the costs be fixed and paid on a lump sum basis and referred to the Registrar for determination.

Associate:

Dated:    12 March 2026