Case: Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225
Outcome: discussed
The power to award costs is conferred by s 43 of the Federal Court of Australia Act 1976 (Cth). The principles which govern the award of costs are well settled. It is open to the Court to make an order for indemnity costs where some special or unusual feature in the case justifies a departure from the ordinary practice: Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 per Sheppard J. Such circumstances include where a party is aware, having been appropriately advised, that it has little or no chance of success but nonetheless persists with its claim. This is subsumed under what his Honour described (at 233) as the commencement or continuation of proceedings "in wilful disregard of known facts or clearly established law". 4 The Bank submits that in this case the applicants were informed well before they commenced this proceeding that any claim they had against it in respect of the investments the subject of the proceeding was misconceived by reason of the fact that they had previously provided the Bank with a Deed of Release dated 25 March 2002 in respect of those investments. The Bank points out that in June 2003 it sent a letter to the applicants' former solicitors enclosing a copy of the Deed of Release executed by the applicants. The letter stated, in substance, that the applicants had released the Bank from any claims, and thus their claim for compensation was misconceived. 5 Notwithstanding this letter, and the information regarding the Deed of Release, the applicants elected to commence proceedings against the Bank in August 2004. Once the proceedings were commenced, the Bank again raised the Deed of Release, this time in the context of seeking security for costs. In October 2004 the Bank's solicitors wrote to the applicants' former solicitors reiterating that the applicants' claim against the Bank was hopeless as the applicants had executed a Deed of Release in 2002. 6 The Bank expressly pleaded the Deed of Release in its defence filed on 1 November 2004. There was then a period during which the matter was dealt with in the Federal Magistrates Court before it was transferred to this Court. In January 2007 the Bank filed a motion seeking summary dismissal on the basis that the latest of a number of statements of claim, as filed, still disclosed no cause of action. It was that motion that, ultimately, succeeded when I indicated, at the close of argument, on 18 October 2007, that I would order that the claim against the Bank be dismissed because the Deed of Release provided a complete defence. I published my reasons for judgment several weeks later. 7 The Bank submits that this is not a case where fine judgment needed to be exercised as to whether the evidence available in support of the applicants' claim warranted the institution of proceedings. It submits that, in wilful disregard of the Deed of Release, the applicants issued this proceeding and pursued it for over three years. During that time the case was listed for the hearing of various applications and directions on a number of occasions. The Bank argues that it actively attempted, throughout, to dissuade the applicants from pursuing their misconceived claim. It adds that it repeatedly pointed out the many procedural failings, on the part of the applicants, which made this proceeding almost unmanageable. 19 In Colgate-Palmolive Sheppard J alluded briefly (at 233) to the distinction between indemnity costs and solicitor and own client costs. In Thors v Weekes (1989) 92 ALR 131 Gummow J, while a member of this Court, stated (at 152): "The general power of the court to award costs under s 43 of the Federal Court of Australia Act permits the court in an appropriate case to order that costs be paid on a "solicitor and client" basis: Australian Transport Insurance Pty Ltd v Graeme Phillips Road Transport Insurance Pty Ltd (1986) 10 FCR 177; 71 ALR 287. This power will not, as that case illustrates, be exercised in every case where fraud is alleged and not proved; usually some further factor must be present such as dishonesty or the irrelevance of the allegations to the issues between the parties. No doubt in an appropriate case costs may even be awarded on an indemnity basis: Degman Pty Ltd (in liq) v Wright (No 2) [1983] 2 NSWLR 354."