Case: De Rose v State of South Australia (No 3) [2005] FCAFC 137
Outcome: applied
This section was considered by Lee J in Ward v Western Australia [1999] FCA 580 ; (1999) 93 FCR 305, whose comments were subsequently adopted and summarised by the Full Court of the Federal Court in De Rose v State of South Australia (No 3) [2005] FCAFC 137 at [8] in the following terms: &#8226; section 85A(1) is intended to remove any ground for anticipation or expectation that unless cause is shown for another order, costs will follow the event &#8226; nonetheless, s 85A acknowledges that the Court has an overriding discretion as to costs and does not expressly impose a limit on the scope of the discretion &#8226; there is no requirement that a threshold condition be met before the Court is empowered to make a costs order. It follows that the exercise of the discretion is not conditional upon a finding of fact or the formation of an opinion as to the occurrence of unreasonable conduct or the existence of special circumstances &#8226; section 85A(2) of the Act puts beyond doubt the extent of the Court's discretion in cases where a party acts unreasonably, but s 85A(2) does not control or limit the discretion available to the Court under s 85A(1) &#8226; the matters to be taken into account in making a costs order are left to the Court's discretion, which must be exercised judicially. However, the starting point is that each party will bear their own costs unless the Court determines that it is appropriate in the circumstances to make an order for costs. Costs in favour of non-parties 43 Mr Preston for the Kabi Kabi #2 Applicant submitted in summary: &#8226; any consideration of an award of costs on the discontinuance of the 29 June 2006 notice of motion must occur in light of s 85A of the Act &#8226; as made clear in Ward [1999] FCA 580 ; 93 FCR 305 and De Rose [2005] FCAFC 137 o the starting point is that each party will bear their own costs unless the Court determines that it is appropriate in the circumstances to make an order for costs o there is no requirement that a threshold condition be met before the Court is empowered to make a costs order under s 85A(2) o section 85A(2) does not control or limit the discretion available to the Court under s 85A(1). &#8226; the conduct of the parties in the matter and the reasons for the discontinuance of a matter can bear heavily on the exercise of the discretion as to costs, so that if the discontinuance can be said to be an acknowledgement of likely defeat or no objective circumstance provides reasons for the discontinuance, a costs order in favour of the other party will ordinarily be made (Finn J in O'Neill v Mann [2000] FCA 1680 at [13] ) &#8226; a significant number of circumstances exist which would justify an award of costs against the Kabi Kabi #3 Applicant in this case &#8226; it is an underlying policy in the Federal Court Rules that the discontinuing party should be liable for the other party's costs unless the Court orders otherwise &#8226; the Kabi Kabi #3 Applicant did not comply with the directions of 9 March 2007 and file material, and did not inform the Kabi Kabi #2 Applicant of the decision to discontinue the application to amend until after the due date had passed to file material &#8226; the Kabi Kabi #2 Applicant filed material by the due date and has thrown away costs as a result &#8226; the Kabi Kabi #3 Applicant should be ordered to pay those costs of the Kabi Kabi #2 Applicant. 48 In my view the following points are relevant in considering the issue of costs: &#8226; first, the policy of the Act with respect to costs as articulated in s 85A is that parties should bear their own costs unless there are such circumstances as specified in s 85A(2): De Rose [2005] FCAFC 137. Logically, it follows that this policy is equally applicable to non-parties - such as the Kabi Kabi #2 Applicant - who incur costs in respect of litigation under the Act &#8226; second, the Kabi Kabi #2 Applicant requested at the directions hearing of 9 March 2007 that it be served with such material as the Kabi Kabi #3 Applicant should file and serve on the respondents to the Kabi Kabi #3 Application, and that it should be entitled to be heard at the hearing on 3 May 2007. In my view the position of the Kabi Kabi #2 Applicant is analogous to that of an intervener in this case, and I note that as a general rule the Court tends not to apply conventional rules as to recovery of costs to interveners: Wilcox J in CFMEU v Queensland Coal and Oil Shale Mining Industry (Superannuation) Ltd [2003] FCA 1174 at [11] - [12] &#8226; third, as Mr Topp submitted, the directions made on 9 March 2007 did not require or otherwise oblige the Kabi Kabi #2 Applicant to file affidavits, outlines of argument or any other material, nor to do anything else at all. Indeed, the Kabi Kabi #2 Applicant is not a party to the proceedings. While the Kabi Kabi #2 Applicant has an interest in the proceedings for obvious reasons, I can identify no requirement of reason or justice which entitles the Kabi Kabi #2 Applicant to recover its costs against the Kabi Kabi #3 Applicant with respect to preparation of material for the hearing of the 29 June 2006 notice of motion &#8226; in these circumstances, and taking into account the principle that an order for payment of costs in favour of a non-party will be exceptional and therefore must be treated with considerable caution, in my view it is not appropriate to order the costs sought by the Kabi Kabi #2 Applicant to be paid by the Kabi Kabi #3 Applicant.