Federal Court of Australia

Southernwood v Brambles Limited (No 5) [2026] FCA 1052

ORDERS

THE COURT ORDERS THAT:

Lump Sum Costs Assessment

1.    Paragraph 1 of the Interlocutory Application filed by the Respondent on 19 June 2026 (Respondent’s Application) be dismissed.

2.    In respect of the costs payable by the Respondent to the Applicants pursuant to orders 4 and 5 of the orders made on 3 June 2026:

(a)    by 14 September 2026 the Applicants file and serve their Costs Summary in accordance with [4.10]-[4.12] of the Costs Practice Note (GPN-COSTS) (limited to 30 pages) together with:

(i)    all reports provided to the Applicants’ lawyers and the Court under paragraph 13 of the orders made on 8 May 2019; and

(ii)    the timesheet invoices, counsel fee records and disbursement invoices forming the basis of the Costs Summary; and

(b)    by 16 December 2026 the Respondent file and serve its Costs Response in accordance with [4.13]-[4.14] of the Practice Note (limited to 30 pages).

Group Member Claims Assessment

3.    By 4.00 pm on 31 July 2026 the Applicants file and serve:

(a)    their application regarding mechanisms for the determination and payment of group members’ claims (the Applicants’ Application); and

(b)    any written submissions and evidence on which they intend to rely in support of the Applicants’ Application (and/or in response to paragraph 2 of the Respondent’s Application).

4.    By 4.00 pm on 28 August 2026 the Respondent file and serve any written submissions and evidence upon which it intends to rely in respect of the Applicants’ Application (and/or in further support of paragraph 2 of the Respondent’s Application).

5.    By 4.00 pm on 11 September 2026 the Applicants file and serve any written submissions and evidence upon which they intend to rely in reply.

6.    The Applicants’ Application and paragraph 2 of the Respondent’s Application be listed for hearing on the first available date from 14 September 2026.

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

REASONS FOR JUDGMENT

MURPHY J:

BACKGROUND

1    On 10 April 2026, the Court delivered reasons for judgment in the trial of the Common Questions in this proceeding: Southernwood v Brambles (No 3) [2026] FCA 418 (trial judgment). At the conclusion of that judgment, the Court requested the parties to confer and revert with a form of orders reflecting the reasons and answering the Common Questions.

2    The parties could not come to agreement, and provided the Court with conflicting proposed orders. On 3 June 2026, the Court delivered judgment determining the dispute as to those orders (see Southernwood v Brambles (No 4) [2026] FCA 691) and made orders reflecting the reasons in the Trial Judgment and deciding the answers to the Common Questions (3 June Orders).

3    Orders 4 to 6 of the 3 June Orders were as follows:

4.    Brambles pay the applicants’ costs of the proceeding save for the costs of and associated with the evidence of Mr David Lee.

5.    The costs in paragraph 4 to be assessed on a lump-sum basis in accordance with Part 4 of the Costs Practice Note (GPN-COSTS). For the avoidance of doubt, this case is a “large or complex” case as contemplated in [4.12] of the Practice Note.

6.    The parties are directed to endeavour to agree the appropriate timetable for:

(a)    the applicants to file and serve their Costs Summary in accordance with [4.10]-[4.12] of the Practice Note. A Costs Summary of up to 10 pages is appropriate; and

(b)    Brambles to file and serve its Costs Response in accordance with [4.13]-[4.14] of the Practice Note.

By no later than 4.00pm on 15 June 2026 the parties shall inform Chambers of the agreed timetable, or if they disagree, their respective positions and competing submissions as to the basis for their position (no more than half a page).

4    Order 9 of the 3 June Orders was as follows:

9.    The proceeding be listed for a case management hearing at 9.30 am on 22 June 2026, or on such later date as is agreed with Chambers, for the purpose of making orders in relation to the further conduct of the proceeding, including with respect to:

(a)    the lump-sum costs assessment referred to in orders 5 to 6 above; and

(b)    the resolution and/or determination of the claims of the Group Members consistent with the Court’s reasons published on 10 April 2026.

By no later than two days prior to the case management hearing, the parties shall file any proposed orders and submissions (no more than five pages) in relation to those matters.

5    On 19 June 2026, Brambles filed an interlocutory application seeking the following orders:

1.    The lump-sum assessment of the Applicants’ costs of the proceeding be stayed pending the determination of any appeal from the Orders of Justice Murphy dated 3 June 2026.

2.    The resolution and/or determination of the claims of the Group Members be stayed pending the determination of any appeal from the Orders of Justice Murphy dated 3 June 2026.

6    Both parties put on short submissions in relation to order 9 of the 3 June Orders. Relevantly to the application for a stay of the lump-sum assessment of the applicants’ costs, Brambles relied on two affidavits in relation to the costs assessment process, that of Elizabeth Harris, costs consultant, sworn 19 June 2026, and that of Paul Nicols, solicitor on the record for Brambles in this proceeding, affirmed 19 June 2026. It also put on short submissions in support of Brambles’ application.

7    The parties appeared before the Court on 22 June 2026 to determine Brambles’ interlocutory application and to make the orders contemplated in order 9 of the 3 June Orders. I made orders at that hearing to dismiss the application for a stay of the lump-sum assessment of the applicants’ costs.

8    In relation to the resolution and/or determination of group members’ claims, which are contemplated by the second paragraph of the Respondent’s Application and order 9(b) of the 3 June Orders, the parties effectively agreed to defer that hearing until the applicants had time to put on an application to propose a mechanism for the determination and payment of group members’ claims (Applicant’s Application). The timeline for that proposal is reflected in orders 3 to 6 orders I made on 23 June 2026 (see above), which have since been vacated and substituted by the orders of Justice Neskovcin dated 29 July 2026. The mechanism for resolving and/or determining group members’ claims was not the subject of controversy at the hearing, and Brambles did not seek written reasons in relation to those orders.

STAY OF LUMP-SUM COSTS ASSESSMENT

9    Consequently, the sole point of contention for explanation in these reasons is whether it was appropriate to dismiss the application for a stay of the lump-sum assessment of the applicants’ costs.

Brambles’ submissions

10    Brambles’ contended that any costs assessment should be stayed pending the hearing and determination of its appeal of the trial judgment to the Full Court, and any further potential appeal to the High Court. This would, it said, avoid the significant time and cost of the assessment process while there remained uncertainty hanging over the final result of the litigation.

11    Brambles succinctly identified the uncontentious legal principles relevant to granting a stay of proceeding pending an appeal. These include that:

(a)    the Court has a broad discretion to order a stay under r 36.08 of the Federal Court Rules 2011 (Cth): Viagogo AG v Australian Competition and Consumer Commission [2021] FCA 175 at [10] (Abraham J)

(b)    the party seeking the stay bears the onus for demonstrating a proper basis for the stay, though this does not require demonstrating special or exceptional circumstances: Viagogo at [10], [12];

(c)    two questions must be considered:

(i)    first, whether there is an arguable point on the proposed appeal: Nolten v Groeneveld Australia Pty Ltd [2011] FCA 1494 at [24] (Kenny J) or some “rational prospect of success” in relation to any of the grounds of appeal: Burns v AMP Finance Ltd [2005] FCA 761 at [5] (Emmett J); and

(ii)    second, whether the balance of convenience favours the grant of a stay: Nolten at [24]; and

(d)    relevant considerations include that, in the absence of a stay, significant time and cost may be incurred unnecessarily, in the event that the appeal is allowed: Zonia Holdings Pty Ltd v Commonwealth Bank of Australia Ltd (No 6) [2024] FCA 1097 at [42]-[43] (Yates J). I note this decision was appealed, but on this point it was undisturbed.

12    Brambles did not make written or oral submissions on (c)(i) above, nor did the applicants address it. The trial judgment is, however, the first shareholder class action to succeed at trial, and was the result of hard fought and complex litigation. I am satisfied there are arguable points for Brambles in its prospective appeal.

13    At the hearing Brambles noted its intention to appeal (which was given effect on 1 July 2026 when Brambles filed a notice of appeal). Brambles argued that were it to succeed on its appeal, it is likely that the Full Court would set aside orders 4 and 5 of the 3 June Orders, which I have set out above and which relate to costs. Alternatively, the Full Court may find for Brambles on some but not all grounds, which may in turn lead to different trial costs.

14    Brambles submitted that, in the event that its appeal is successful in full or in part, or otherwise results in a variation to orders 4 and 5 of the 3 June Orders, any time or money spent in relation to the lump sum costs assessment process would have been unnecessary and therefore wasted. Given the length and complexity of the proceedings, Brambles said that that time and money required for an assessment would likely be significant.

15    In relation to the timing of the lump-sum costs assessment process that was ordered, Brambles noted that the applicants’ proposed a timetable in which the necessary Costs Summary and Costs Response document would not be completed until 7 December 2026. Brambles further argued that, as contemplated by paragraph [4.15] of the Costs Practice Note, following the filing of the Costs Response, procedural fairness may require that the Court afford the parties an opportunity to file brief written submissions addressing the law on relevant issues in accordance with any timetable set by the Court which would take further time.

16    Brambles’ submitted that it followed that it was likely that any hearing on the assessment of costs would not take place until after the summer shutdown period.

17    On the assumption that the prospective appeal would be listed for the February-March 2027 Full Court sitting period, Brambles contended that there was a reasonable prospect that the applicants’ costs entitlement would remain undetermined when the appeal was heard. Brambles said the fact that any determination would not be made until next year was relevant to consideration of any potential prejudice to the applicants attributable to lost interest from deferring the assessment process until resolution of the appeal. Brambles submitted that this assessment of prejudice would extend to the applicants’ litigation funders.

18    In relation to cost, Brambles said its best estimate of its costs expended in conducting the lump-sum assessment process would be between $170,000 and $220,000. Additionally, Brambles said there would be additional and significant costs to the applicants and the Court. Brambles said it was unnecessary and inappropriate for the parties and the Court to expend resources when any costs order may be affected by the appeal.

19    Brambles’ submissions placed considerable reliance on the decision of Yates J in Zonia which concerned a shareholder class action which his Honour dismissed in May 2024. Later that month, his Honour made orders which (among other things) provided a timetable for the parties to file evidence and submissions on the question of costs. The third of three disputed matters concerned whether the assessment of costs should be stayed pending the outcome of appeals lodged by the applicants.

20    In finding for the applicants and granting a stay, his Honour accepted (at [43]) that the lump-sum assessment of costs might well be lengthy, time‑consuming, and resource-intensive. He considered that were the appeals to be all or partly successful, work would have been undertaken and costs incurred unnecessarily. It might also have led to the need to undertake additional or different work at an overall increased cost to the parties. As such, his Honour found a stay was appropriate.

21    Brambles concluded that given the time and cost involved in the costs assessment, this is a case where “the better course is to await the outcome of the appeals so that there is no wastage in undertaking the lump sum assessment, including wastage of the Court’s resources”: Zonia at [44].

22    For their part, the applicants relied on two decisions: Stillwater Pastoral Company Pty Ltd v Stanwell Corporation Ltd (No 2) [2025] FCA 316 (Sarah C Derrington J) and Brady v NULIS Nominees (Australia) Limited in its capacity as trustee of the MLC Super Fund (Stay Application) [2025] FCA 588 (Markovic J).

23    Both cases concerned applications for a stay on orders as to costs in light of impending appeals: Stillwater at [1]-[2]; Brady at [2]-[4]. In both cases, such orders were refused: Stillwater at [53]; Brady at [33]-[35].

24    In Stillwater, Stillwater Pastoral Company Pty Ltd had initiated a proceeding on behalf of a class of electricity consumers against Stanwell Corporation Ltd and CS Energy Ltd for breaches of s 46 of the Competition and Consumer Act 2010 (Cth). Stillwater and the class were unsuccessful at trial (see Stillwater Pastoral Company Pty Ltd v Stanwell Corporation Ltd [2024] FCA 1382). Stillwater filed a notice of appeal in February 2025. In March 2025, the parties were heard in relation to the question of costs. There were three questions that arose for determination at that hearing, with the first and third at issue in this proceeding (at [2]):

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…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.

25    Justice Sarah C Derrington found that the likely prejudice to Stanwell and CS Energy in the event that the appeal was unsuccessful outweighed the potential wasted costs of an assessment of the trial costs in the event that the appeal succeeded. As such, a stay was granted.

26    Of specific importance to her Honour’s judgment was the absence of a power under the Federal Court of Australia Act 1976 (Cth) 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 but following the substantive judgment: [51]. Her Honour found (at [49]) that the “real prejudice” arose 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. Her Honour considered that CS Energy’s prejudice was of similar magnitude.

27    Stanwell submitted that a stay of the assessment until the conclusion of the appeal would provide Stillwater, the unsuccessful party, with “a windfall benefit of several million dollars” in interest. In finding for Stanwell and CS Energy, Sarah C Derrington J found at [52] that the while the absence of a power for the Court to order that interest be payable on a costs judgment from an earlier date may not serve to highlight a prejudice on the two energy companies, it did 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”.

28    In Brady, Markovic J made orders in February 2025 dismissing the proceeding, and later that same month, made orders in relation to costs. The applicant, Brady, appealed both the dismissal orders and the orders which contemplated (in part) costs. Justice Markovic found that Brady failed to establish that there was a “real risk” that he would “suffer prejudice or damage” if a stay is not granted, which will not be redressed by a successful appeal (at [32]). In doing her Honour found that NULIS, the respondent, would be owed interest on costs that would “not be insignificant”: at [31].

29    Following Stillwater, Markovic J said as follows (at [32]):

It seems that the real contest here is which party should have the use of the funds pending determination of the appeal: the Funder, who in reality is liable to pay the costs once assessed; or NULIS, the beneficiary of the costs order. If a stay is ordered, NULIS will be kept out of its money pending the resolution of the appeal and the Funder will gain a financial benefit if Mr Brady is unsuccessful in his appeal. Neither the amount that might be foregone by NULIS or the amount Mr Brady will incur in potentially wasted costs in participating in a costs assessment has been quantified but I am satisfied that the former is sufficiently significant such that those economic consequences to the Funder weigh against a stay, particularly where the correlative benefit to NULIS cannot be mitigated.

(Emphasis added.)

Consideration

30    For the following reasons, I am not satisfied that it is appropriate to make an order to stay the lump-sum assessment of the applicants’ costs of the proceeding.

31    First, I consider that depriving the applicants of interest on the judgment, and the corresponding windfall to Brambles that would result from a stay, weigh the balance of convenience against such an order. I rely here on the reasoning of Markovic J in Brady and SC Derrington J in Stillwater in which a stay was not granted for that reason (among others). In those cases, the question of time and waste was weighed against the prejudice of keeping interest from the successful parties, and the corresponding windfall to the unsuccessful parties. Justice Sarah C Derrington noted in Stillwater that the Court had no power to order interest be paid on costs from a date preceding the entry of the costs judgment. That is the present case.

32    If I were to stay the assessment of costs, the applicants would be deprived of interest on costs for the period prior to the entry of the judgment for the costs as assessed. As noted in the hearing, the appeal may not come on for a lengthy period. It may be possible to hear the substantive appeal in the February-March 2027 appeal period, but that seems unlikely. The hearing of the trial occupied six weeks, the trial judgment is 1,257 pages long, and at the time I thought the appeal was likely to take every point (which view was subsequently vindicated by the appeal filed). It seemed likely that the appeal would require a listing of at least seven days, and I doubted that could be squeezed into the February-March 2027 sittings.

33    I thought there was a likelihood that the appeal would be pushed to a later period. Moreover, any stay that was granted would not subsist only to the hearing of the appeal. It would need to subsist until judgment in the appeal. As submitted by the applicants, expecting a six-month turnaround would be optimistic.

34    I accept Brambles’s submission that the lump-sum costs assessment may take up to six months, pushing the finalisation of the costs assessment into early 2027. But even if a costs order is made around January or February 2027, in my view judgment in the appeal can realistically be expected to be, say, 6-12 months later due to the size and complexity of the appeal.

35    That means that any stay on the assessment of costs which is granted could reasonably be expected to operate until the end of 2027, and perhaps longer. The applicants submitted that it may be longer than that, in the order of 2-3 years. I accept that a longer estimate than mine is a possibility. The post-judgment interest rate was, at the time of the application, approximately 9.6% and it is now 10.35%. Without having the benefit of a detailed costs assessment, relying on my experience in such matters it seems likely that the applicants’ party-party costs will be in the order of $10-12 million.

36    It would be unsurprising if the appeal is not decided until late 2027, and I estimate that the lump sum costs assessment process should be complete by early 2027. Given the approximate quantum of the applicants’ party-party costs, the foregone interest on costs for one year is likely to be in the order of $1-1.2 million. In the event that Brambles’ appeal is unsuccessful, that would be a substantial amount foregone to the prejudice of the applicants and correspondingly enjoyed by Brambles.

37    If a stay is granted (and the appeal is unsuccessful) the lump sum assessment process could not begin until judgment in the appeal, and the process could be expected to take approximately six months. On my rough estimate that means that entry of the costs judgment would not occur until around mid-2028. In that event the foregone interest on costs would be in the order of $1.5-1.8 million.

38    Having regard to Brady at [32] and Stillwater at [52], I am persuaded that, if a stay on the costs assessment is granted, the applicants’ foregone interest on unassessed costs will be of such significance that it weighs heavily against a stay.

39    It was, of course, open to Brambles to offer to mitigate the applicants’ foregone interest on unassessed costs in the event its appeal was unsuccessful, and it did not inform the Court that it had offered to do so.

40    Second, I was unconvinced by Brambles’ attempt to distinguish Stillwater and Brady on the basis that in those cases there was some material that allowed the Court to quantify potential interest, and here these was little on hand.

41    I accept that there was little material from to calculate the possible foregone interest, but I do not accept that it was unavailable for the Court to take a rough and ready approach to that question:

(a)    First, I note that in Stillwater at [49] and [53], the assessment of a “ball park” figure for costs made up part of the assessment that a stay was not appropriate.

(b)    Second, I have substantial experience in relation to costs in class actions both from 15 years as a solicitor in the area, and as a judge having been required to read countless Costs Referee’s reports to determine whether the applicant’s costs are fair and reasonable for the purposes of settlement approval.

(c)    Third, there would be a curious circularity if the applicant were required to incur further costs to provide detailed material in relation to the quantum of their costs in order to enable the Court to quantify potential interest, when the whole point of the lump-sum costs assessment process is to determine that figure with precision. A rough estimate is sufficient for ascertaining the extent of any potential prejudice to the applicants or windfall for Brambles for the purposes of determining where the balance of convenience lies.

42    Third, I was unconvinced by Brambles’ reliance on Zonia, for similar reasons to Markovic J in Brady (at [20]). When Yates J considered the stay application in Zonia, the appeal in that proceeding was to be heard two months later. In the present case the notice of appeal had not been filed at the time of hearing the application, but I anticipated that the appeal grounds would be broad (as they turned out to be). When the appeal might be listed for hearing, let alone judgment delivered, is a matter of considerable uncertainty.

43    Fourth, the quantum of the interest that will be foregone by the applicant if the appeal is unsuccessful substantially outweighs the potential waste of costs by Brambles in going through the lump-sum costs assessment process. Brambles estimated its cost of going through the lump-sum assessment process at approximately $170,000 to $220,000. In many cases that would be a prohibitively large amount to contemplate being wasted, but here it is insignificant in relation to the party-party costs likely to be due to the applicant on the judgment as it stands, and substantially less than the interest on costs that will be foregone by the applicant if a stay is granted and the appeal is unsuccessful.

44    Fifth, both sides in this costs dispute are large. Brambles will be untroubled by meeting its side of the costs of the lump-sum costs assessment process. I have not looked at its recent annual report but in 2016 and 2017 it made or was projected to make around $1 billion in Underlying Profit. And there is no real risk that, if the costs of the lump-sum costs assessment process are wasted, Brambles will be unable to recover that from the litigation funder of the proceeding. Indeed that amount is tiny compared to the costs the litigation funder will be due to pay to Brambles if the appeal is successful. That stands in contrast to the applicants’ foregone interest on unassessed costs which cannot be recovered by the applicants.

45    Sixth, in the event that Brambles’ appeal is partially successful, the costs and output of the lump sum costs assessment process is unlikely to have been entirely wasted. I expect that that costs assessment can still be put to good use in relation to those parts of the case that the applicant was successful on, by apportionment.

46    Seventh, as noted above, a stay could subsist until around the end of 2027, after a long and complex proceeding which was long in the gestation period before trial, and long and hard-fought at trial. It is right that the successful party enjoys the fruits of success as soon as is practicable.

47    I made orders accordingly.

Associate:

Dated:    3 August 2026