Case: Oshlack v Richmond River Council [1998] HCA 11 ; (1998) 193 CLR 72
Outcome: applied
by McHugh J in Oshlack v Richmond River Council [1998] HCA 11 ; (1998) 193 CLR 72 at 96, [66] [70] are directly relevant: By far the most important factor which courts have viewed as guiding the exercise of the costs discretion is the result of the litigation. A successful litigant is generally entitled to an award of costs. As Devlin J said in Smeaton Hanscomb &amp; Co Ltd v Sassoon I Setty, Son &amp; Co [No 2] [1953] 1 WLR 1481 at 1484; [1953] 2 All ER 1588 at 1590, when setting aside an arbitrator's costs award: "the arbitrator is not directing his mind to one of the most, if not the most, important of the elements which ought to affect his discretion, namely the result of the case. Prima facie, a successful party is entitled to his costs. To deprive him of his costs or to require him to pay a part of the costs of the other side is an exceptional measure." The combined force of the sentiments recognised above by Mason CJ, regarding the need for consistency in order to avoid injustice, and by Devlin J, regarding the most significant factor affecting the costs discretion, provides the jurisprudential basis for the important principle commonly referred to as the "usual order as to costs". The usual order as to costs The expression the "usual order as to costs" embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party [ Latoudis [1990] HCA 59 ; (1990) 170 CLR 534 at 543, per Mason CJ; at 562-563, per Toohey J; at 566-567, per McHugh J; Cachia v Hanes [1994] HCA 14 ; (1994) 179 CLR 403 at 410; per Mason CJ, Brennan, Deane, Dawson and McHugh JJ]. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation. As a matter of policy, one beneficial by-product of this compensatory purpose may well be to instil in a party contemplating commencing, or defending, litigation a sober realisation of the potential financial expense involved. Large scale disregard of the principle of the usual order as to costs would inevitably lead to an increase in litigation with an increased, and often unnecessary, burden on the scarce resources of the publicly funded system of justice. The traditional exceptions to the usual order as to costs focus on the conduct of the successful party which disentitles it to the beneficial exercise of the discretion. In Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873 at 874, Devlin J formulated the relevant principle as follows: "No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct." "Misconduct" in this context means misconduct relating to the litigation [ King &amp; Co v Gillard &amp; Co [1905] 2 Ch 7; Donald Campbell &amp; Co Ltd v Pollak [1927] AC 732 at 812], or the circumstances leading up to the litigation [ Bostock v Ramsey Urban District Council [1900] 2 QB 616]. Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation [ Jones v McKie [1964] 1 WLR 960; [1964] 2 All ER 842 ; Bostock [1900] 2 QB 616 at 622, 625, 627]; unnecessarily protracts the proceedings [ Forbes v Samuel [1913] 3 KB 706] ; succeeds on a point not argued before a lower court [ Armstrong v Boulton [1990] VR 215 at 223]; prosecutes the matter solely for the purpose of increasing the costs recoverable [ Hobbs v Marlowe [1978] AC 16] ; or obtains relief which the unsuccessful party had already offered in settlement of the dispute [ Jenkins v Hope [1896] 1 Ch 278]. Apart from anomalous examples in the equity jurisdiction [These anomalies typically feature a trust fund or property which will readily satisfy benevolent costs orders. Such examples were recognised by O 55 of the 1875 Rules which, after stating that costs shall be in the discretion of the Court, declared that "nothing herein contained shall deprive a trustee, mortgagee, or other person of any right to costs out of a particular estate or fund to which he would be entitled according to the rules hitherto acted upon in Courts of Equity"], there are very few, if any, exceptions to the usual order as to costs outside the area of disentitling conduct.