The recent decisions of Mak Industrial Water Solutions Pty Ltd v Doherty [No 3] WASC 313 (Mak) and Inpex Operations Australia Pty Ltd v AIG Australia Ltd [2023] WASC 332 (S) (Inpex) saw Quinlan CJ and Lundberg J provide a strong reminder to the legal profession as to their current expectations in costs disputes and admonish the now all too common course adopted by parties when resolving them.
The Australian Courts have a wide discretion to award costs in civil litigation. These orders will generally be made by the Court shortly after the delivery of judgment in a proceeding, whether that be an interlocutory judgment or final judgment.
The general rule is that “costs follow the event”, such that the unsuccessful party will be required to pay the successful party’s legal costs[1]. However, there are some exceptions to this general rule, and the Court will often depart from it in circumstances where multiple parties have experienced some relative form of success.
Unsurprisingly, the parties to contested litigation are often unable to agree amongst themselves as to appropriate costs orders following judgment. It is in these circumstances that a “costs dispute” arises and the Court will be asked to intervene and resolve that dispute.
In the Mak and Inpex cases, Judges of the Supreme Court of Western Australia have been asked to intervene and resolve costs disputes.
Both concerned an interlocutory judgment being rendered in ongoing proceedings. The judgments in the original substantive applications provided, on their face, clear outcomes as to who was the more successful party and, therefore, in whose favour the costs orders should be made. However, the parties to the disputes could not agree on the position themselves.
Having been unable to agree to the costs orders, the parties then sought the Court’s involvement and proceeded to embark on the “regrettably all too common course”[2] of requesting additional time to prepare legal submissions and evidence in support of their respective positions. In both cases, the Court was reluctantly persuaded to accede to the request[3].
The Court’s reluctance was later found to be prophetic; an avalanche of additional material was soon deployed which, ultimately, bore little influence over the Court’s final decision. In Mak, Quinlan CJ lamented that the submissions and evidence deployed on costs were lengthier than that which was relied on by the parties for the purposes of the original substantive application[4]:
“As a consequence of my having reserved the costs, instead of the issue being resolved efficiently and inexpensively, I received a total of 24 pages of written submissions and references to 19 authorities of this and other courts. As it happens, the submissions filed in relation to the costs of the application were, in aggregate, longer than the submissions in relation to the applications for summary judgment themselves.”
(emphasis added)
Quinlan CJ then went on to admonish this approach. He posited that this type of conduct simply does not serve the interests of justice or those of the parties to the litigation[5]:
“… A judge of this Court does not need lengthy submissions, citing chapter and verse, as to the principles concerning the awarding of costs, including indemnity costs. Nor does a judge need submissions as to the effect of the very decision he or she has just delivered. And, insofar as a party wishes to refer to correspondence concerning an application, that can generally be done by providing it at the hearing.”
All of us (myself included) should reflect upon whether the course adopted in this application – which is regrettably all too common – is conducive to the effective and efficient conduct of litigation, the interests of the parties and the interests of justice generally.”
(emphasis added)
The decision in Inpex soon followed. Lundberg J cited with approval the position adopted by Quinlan CJ in Mak. He said that the decision should serve as a “strong reminder to practitioners” as to the Court’s expectations when dealing with costs disputes, noting the need to discourage them from turning into “satellite or parasitic litigation”[6]:
“It would certainly have been preferable for all of these issues to have been disposed of at the first available opportunity, while the matter was relatively fresh for all persons involved, including me ….
… his Honour's comments provide a strong reminder to practitioners before it that costs disputes should be addressed promptly and efficiently, and without the need for prolix submissions or voluminous affidavits being filed. Allowing costs disputes to develop into satellite or parasitic litigation is firmly to be discouraged …”
(emphasis added)
In a warning to parties involved in litigation, Lundberg J thought it appropriate that, in addition to making costs orders in favour of the Inpex parties for the original substantive application, he should go further and for his comments to be “crystallised into an order”[7] that the Inpex parties also be awarded their full costs for a wasted hearing resulting from the conduct of the defendants.
It is clear from recent decisions that the Supreme Court of Western Australia will closely monitor the parties’ conduct in costs disputes. The Court will no longer simply accept that all costs disputes should develop into time-consuming and material-heavy disputes themselves. The Court’s expectations have been clarified, such that practitioners should adopt a pragmatic and commensurate approach that serves the interests of justice and those of their own clients. The Justices of the Supreme Court of Western Australia will be ready to promptly resolve costs disputes and so should the parties be ready to promptly argue them.
If you require advice on any matters relating to litigation and dispute resolution, including as to the best approach to adopt in costs disputes, please contact Millie Richmond-Scott.
[1] See Garnett v Bradley (1878) 3 App Cas 944 at 950 per Lord Hatherley and at 959 per Lord O’Hagan; see also Wentworth v Attorney-General (NSW) (1984) 154 CLR 518 at 527-528, as cited with approval in Oshlack v Richmond River Council 1998) 193 CLR 72 at [39].
[2] Mak at [6].
[3] Mak at [2]-[3] and Inpex at [6].
[4] Mak at [4].
[5] Mar at [5]-[6].
[6] Inpex at [9]-[10].
[7] Inpex at [12].
