Case: Flew v Mirvac Parking Pty Ltd [2006] FMCA 1818
Outcome: considered
The parties agree on many of the factors to be taken into account in the exercise of the Court's discretion to make an order under rule 1. As discussed in the authorities which consider O 62A r 1 and the equivalent provision in the Federal Magistrates Court Rules, the factors include: &#8226; the timing of the application ( Sacks v Permanent Trustee Australia Ltd [1993] FCA 502 ; (1993) 45 FCR 509 at 511 per Beazley J; Flew v Mirvac Parking Pty Ltd [2006] FMCA 1818 at [48] per Barnes FM; Minns v State of NSW (No. 2) [2002] FMCA 197 at [9] per Raphael FM]); &#8226; the complexity of the factual or legal issues raised in the proceedings ( Hanisch at 387 per Drummond J; Dibb v Avco Financial Services Limited [2000] FCA 1785 at [15] per Sackville J); &#8226; the amount of damages that the applicant seeks to recover ( Hanisch at 387) and the extent of any other remedies sought ( Flew at [48]); &#8226; whether the applicant's claims are arguable and not frivolous or vexatious ( Flew at [15]); &#8226; the undesirability of forcing the applicant to abandon the proceedings ( Woodlands v Permanent Trustee Company Limited (1995) 58 FCR 139 at 148 per Wilcox J; Flew at [9]); and &#8226; whether there is a public interest element to the case ( Woodlands at 146; Flew at [23], [47]). 7 Virgin contends that, in addition, the Court should take into account: &#8226; the costs likely to be incurred by the parties in the preparation for, and hearing of, the matter ( Flew at [48]); &#8226; whether the party opposing the making of the order has been uncooperative and/or has delayed the proceedings ( Dibb at [17]; Hanisch at 390); and &#8226; '... any other matters which may go towards establishing that there should be a departure in advance from the usual rules as to quantification of the amount of costs to be payable by the ultimately unsuccessful party ' ( Flew at [48]). 39 A deterrent effect of a potential adverse costs order is insufficient of itself to warrant an order under O 62A r 1 ( Dibb at [16]; Flew at [52]). Virgin says each applicant must establish that he will be ' prevented or inhibited from conducting his case ' if no order is made ( Dibb at [16]). Virgin submits that, while not determinative of the entitlement to an order, the applicants need to establish that they would be forced to abandon the litigation. It is not sufficient, Virgin says, that the applicants do not want to be exposed to an order for costs in the ordinary course if they are unsuccessful. 40 Virgin submits that, as found by Barnes FM in Flew at [53], the fact that an applicant would need to go into debt to meet costs does not lead to an inference that he or she would be forced to abandon the proceedings if no order were made. Further, Virgin says that there is no sufficient evidence that either Mr Ferguson or Mr Corcoran would be forced to discontinue the proceedings if the costs were not capped. Mr Corcoran and his wife are in receipt of income and have assets. Those assets may, Virgin submits, enable Mr Corcoran to obtain a loan rather than sell the assets. In any event, reluctance to be exposed to the risk of selling an investment property cannot, Virgin submits, be equated to being "forced" to abandon the claim. 41 As Barnes FM said in Flew at [52], impecuniosity of one party or claims about the relative financial significance of the cost of proceedings cannot of themselves be determinative. It would not be unusual that fear of exposure to costs acts as a deterrent to litigation. It is in that context that the comment that a party should not be "forced" to abandon litigation because of the possibility of an adverse, uncapped, costs order should be considered. While it may not be necessary to establish that the party was forced to abandon litigation for fear of costs, mere concern as to the effect of an adverse costs order on a party's asset position, or a concern that a party may become bankrupt if unable to meet a costs order are not, by themselves, factors that sufficiently render the applicants' position different from other litigants faced with the usual costs order. 42 The applicants rely on a juxtaposition of factors, some but not all of which have been present in cases previously decided: (a) there is no financial benefit to the applicants in bringing the proceedings; (b) there is a public interest in the resolution of the issues; (c) the need for a sufficiently disabled person to provide a carer on flights is likely to affect numbers of people for whom the incremental cost is likely to be insufficient to justify the commencement of proceedings under the Act; (d) each of the applicants has asserted that he would be likely to be unable to proceed with the litigation if the O 62A r 1 order were not made; (e) the explanation given by each applicant is reasonable and has not been challenged as a bona fide reason; (f) the application has been brought in a timely manner; (g) the applicants have, after an initial period clarifying their case, sought to narrow the issues to be determined; (h) if the matter had proceeded in the Supreme Court of New South Wales, a cap would have applied automatically (s 47 of the Legal Aid Commission Act 1979 (NSW)). 53 It cannot be said that the case lacks complexity. As pointed out by Beazley J in Sacks at 511, the intention on the introduction of O 62A r 1 was to apply the rule principally to commercial litigation at the lower end of the scale in terms of complexity and the amount in dispute. That is, it was introduced to keep costs proportionate in low value litigation. The original object of O 62A r 1 as set out in a letter from the Chief Justice of the Federal Court to the President of the Law Council of Australia regarding the introduction of the rule, was to ' define a budget so that the management of the case might be tailored according to its economic limits ' (cf Sacks at 511, Flew at [7]). That, however, is not a limitation on the availability of an order. There is no reason why it should not apply, in appropriate situations, to cases that are somewhat complex. 58 Virgin contends that the costs likely to be incurred will be substantially in excess of $15,000 and in excess of the combined proposed cap of $30,000. Virgin estimates that the costs will be well in excess of $53,000, reflecting the considerable time, expense and resources that will be required for the preparation and the hearing. Virgin also contends that the applicants have, to date, demonstrated a failure to conduct the matter in an efficient and economical manner. It has been noted (by Heerey J in Fetherston and by Barnes FM in Flew ) that neither the Act nor the Federal Court Rules provide for a limitation to the usual costs order or any special provision for costs in proceedings brought under the Act. Unlike the Federal Magistrates Court, the Federal Court Rules do not limit and prescribe costs, enabling a party better to calculate at the outset of litigation the likely costs to be awarded to the successful party. However, this is only of assistance when an estimate can be made of the length of hearing and the costs of the evidence. In Flew , as here, Virgin has estimated the costs of a likely hearing, not including its costs of preparation and evidence.