Austin BMI Pty Ltd v Deputy Premier (No 2)

In this case, Justice Freeburn considered whether it was reasonable for the joint applicants to pay two full sets of costs. The applicants claimed there had been duplication in the way the litigation was conducted. The judgment provides a detailed consideration of when a party will be burdened with more than one set of costs. His Honour took the view that in circumstances where it appeared there was a significant degree of cooperation and efficiency in the way in which the litigation was conducted costs should follow the event and each party was entitle to its costs from the joint applicant.

Freeburn J

21 July 2023

Briefly, the proceeding had comprised three separate applications for a statutory order for review of a decision made by the first respondent to “call in” a development application made by the second respondent (Wanless), brought by three sets of applicants. [1]–[2]. The three proceedings were run together and largely involved common issues. All six parties were represented individually. [22]. The applications were dismissed. [3].

The matter of costs

Whilst the applicants accepted that the normal order is that costs follow the event, they argued that it would not be justified for them to pay two full sets of costs – those of each of the first and second respondents. They submitted that since the second respondent participated in the proceedings “as if they were the only respondent”, there was duplication in the way they were conducted and accordingly they should only be liable for 50% of its costs. [5]–[6].

The Statham Principles

It is generally accepted that where parties on the same side of the court record have the benefit of separate representation, the court will not usually allow more than one set of costs to successful litigants where no possible conflict of interest arose between them in the conduct of their cases: see Statham v Shepard (No 2) (1974) 23 FLR 244, 246–247. In that case, Justice Woodward added the following provisos:

1)if a conflict of interest appears possible but remote, the defendants should make any relevant inquiries from the plaintiff concerning the manner in which it intends to run their case (if this could possibly resolve any conflict between defendants);

2)circumstances might arise in which, although the defendants were united in their opposition to the plaintiff, their relationship to each other could be such that they would be acting reasonably in remaining at arm’s length during the general course of litigation;

3)even if defendants are acting reasonably in maintaining separate representation, they may still be unable to recoup part of their costs in the event they act unreasonably by duplicating costs.

Was the fact that the successful parties were represented separately at trial reasonable?

In Verduci v Catanzarita (1981) 53 FLR 156 the court held that in matters where there are differences in the facts or law concerning the several defendants, or if they have different interests, or if there is a reasonable difference of opinion concerning the running of the defence, then the costs of separate representation may be permitted. Three fundamental rationales underlie the Statham principles, namely:

1)costs should be determined having regard to fairness and the proportion of costs incurred by each party (see Commonwealth of Australia v Gretton [2008] NSWCA 117, [121]);

2)the primary issue is not whether the parties have acted reasonably or whether there is any duplication, but whether it is reasonable for the unsuccessful litigant to bear more than one set of costs (see HP Mercantile Pty Ltd v Hartnett [2017] NSWCA 79, [14]);

3)costs are not awarded to punish an unsuccessful party, but rather to indemnify the successful party (see Oshlack v Richmond River Council (1998) 193 CLR 72, [67]).

His Honour observed that:

“the Statham principles are a small subset of the court’s absolute and unfettered discretion to award or not award costs. The court is required to exercise that discretion judicially and, in doing so, will apply the general rule that costs follow the event. Where the unsuccessful party may be burdened by more than one set of costs the Statham principles are a useful guide to the exercise of the discretion”. [18].

In the current matter, an allegation had unsuccessfully been made to the effect that the first respondent (the Deputy Premier) was biased in favour of the second respondent (a private corporation). In fact, the allegation of apprehended bias was “a major plank in the claims brought by all three applicants”. [29]. It followed that there were compelling reasons for both respondents to remain at arm’s length (see Waterfront Place Pty Ltd v Minister for Planning (No 2) [2019] VSCA 166). It would not have been viable for the first and second respondents to closely collaborate on the litigation, in which they each had disparate interests. [30]. Therefore each acted reasonably in maintaining separate representation. [32].

Was it nonetheless appropriate that the first and second respondents be deprived of part of their costs if they act unreasonably by duplicating costs on any particular matter or at any particular time?

The joint applicants sought to argue that in circumstances where the first respondent had the burden of the primary responsibility for defending the challenge to the “call-in”, it was unreasonable for the second respondent to actively participate in the proceedings as if it were the only respondent and it therefore followed that the joint applicants should only be liable to pay the first respondent’s costs and 50% of the second respondent’s costs. [34]. His Honour did not agree that that was the appropriate course. He did not share the view that “because of the presence of the Deputy Premier’s legal team, Wanless’ legal team ought to have, like a cruise ship, engaged their engines to ‘half speed ahead’”. [35]. Nor did he accept that the second respondent should have only filed supplementary submissions [36]; that there was any repetition in the way the cases were presented orally [37]; or that the second respondent’s participation in the proceedings had been immoderate. [39].

Noting that the litigation had been run with “a significant degree of cooperation and efficiency” his Honour held that costs should follow the event. [40]–[41].

Disposition

It was ordered that the applicants pay the costs of the first and second respondents.

A Jarro