Case: Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225
Outcome: referred to
The usual rule is that costs are payable on a party and party basis, unless the circumstances of the case warrant a departure from the normal course: see Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 (" Colgate-Palmolive ") at 233 per Sheppard J and the Federal Court Rules (Cth), O 62. In that case, Sheppard J considered the circumstances in which indemnity costs might be awarded, referring, amongst other things, to "misconduct that causes loss of time to the Court and to other parties" although, as his Honour concluded, "[t]he question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis": see Colgate-Palmolive at 233-234. The Full Court reconsidered the appropriateness of an indemnity costs award in Re Wilcox: Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151 (" Re Wilcox ") at 152-153 per Black CJ and 156-158 per Cooper and Merkel JJ. In Re Wilcox , at 156-157, Cooper and Merkel JJ reiterated Sheppard J's approach, saying: In order to exercise the discretion [regarding costs] judicially the following principles have been accepted by the Court as applicable: (a) the Court ought not to depart from the rule that costs be ordered on a party and party basis unless the circumstances of the case warrant the Court in departing from the usual course; (b) the circumstances which may warrant departure from the usual course arise as and when the justice of the case so requires or where there may be some special or unusual feature in the case to justify the court in departing from the usual course; (c) whilst the circumstances in cases in which indemnity costs have been ordered offer a guide, the question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for costs other than on a party and party basis. See also Abbott v Random House Australia Pty Ltd [1999] FCA 1540 at [5] per Beaumont, Miles and Drummond JJ, quoting the above passage with approval. Even more recently, the Full Court in Hamod v New South Wales [2002] FCA 424 ; (2002) 188 ALR 659 at 665 (per Gray J, with whom Carr and Goldberg JJ agreed) explained the basal principle for an award of indemnity costs in the following terms: Indemnity costs are not designed to punish a party for persisting with a case that turns out to fail. They are not awarded as a means of deterring litigants from putting forward arguments that might be attended by uncertainty. Rather, they serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the Court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs. 7 A perusal of other cases decided in this Court, including in recent times, shows that these principles are regularly applied. In particular, the Court may award indemnity costs in respect of misconduct that causes loss of time to the Court and to other parties: see Tetijo Holdings Ltd v Keeprite Australia Pty Ltd [1991] FCA 187 per French J, referred to with approval in Colgate-Palmolive at 233 and Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189 (" Ugly Tribe ") at [7] per Harper J. In Xat Ky v Australvic Property Management Pty Ltd (No 2 ) [2007] FCA 1785 , Middleton J awarded indemnity costs to prevent the plaintiffs being out of pocket where "there was a considerable loss of time, inconvenience to the parties and the Court, and a wilful disregard to established law in the attempts to re-open the case ... and in the application for a restraining order": see [12]-[13], [29].