Federal Court reminder to raise costs during a hearing, not after judgment

By 01/08/2014Costs
when to raise costs

In Oswal v Apache Corporation (No 2) [2014] FCA 778 the Federal Court has reminded litigators that it will generally be too late to raise costs for the first time after judgment.

Background

The Court dismissed Oswal’s application for orders staying the proceeding and ordered that Oswal pay Apache’s costs of the stay application.  Before the costs order was entered Oswal applied under rule 39.04 to vary it such that Apache pay 30% of Oswal’s costs of the application.

In dismissing Oswal’s application Gilmour J made a number of observations of relevance to litigators in the Federal Court:

1.  The discretionary power under rule 39.04 (“The Court may vary or set aside a judgment before it has been entered”) is:

to be used only sparingly, with great caution and rarely, having regard to the public interest in the finality of litigation. The discretion is exercised to cure injustice, particularly where it would otherwise be irremediable. The grounds for exercising the discretion are various but include error, oversight, a misapprehension of the law or a decision given in ignorance or forgetfulness of a statutory provision: Ashby v Slipper (No 2) [2014] FCAFC 67 at [12]-[14].”

2.  A party should ordinarily make submissions on costs during a hearing (at [5]).

3.  If it is thought desirable to have the Court’s decision on a substantive issue before putting submissions in relation to costs, as is sometimes appropriate in complicated cases, this should be raised with the Court during the hearing. It is inappropriate for a party to say nothing about costs, or any other ancillary matter, during a hearing, await its outcome and then ask the Court to vary its orders: Hanave Pty Ltd v LFOT Pty Ltd [1999] FCA 572 at [1]-[2]; Preston Erection Pty Ltd v Speedy Gantry Hire Pty Ltd [1999] FCA 122 at [1]-[2].

4.  The Court should assume parties have nothing to say about costs, if they have not specifically dealt with that subject: ACCC v Daniels Corporation Pty Ltd [2001] FCA 936 at [11]; Grygiel v Baine (No 2) [2005] NSWCA 434 at [12] (Grygiel).

In this case Gilmour J said that Oswal could and should have made submissions as to costs during the hearing of the stay application, and held that there was no basis for exercising the discretion under rule 39.04 to set aside the costs order.

Footnote as to practice in other jurisdictions

For NSW and WA practitioners (and probably practitioners in other jurisdictions) the following extract from Grygiel (Basten JA, Mason P and Bryson JA agreeing) is pertinent:

“11   … Failure to address on costs is commonplace and, with two qualifications which will be addressed below, may properly be taken by the Court as an indication that no special or unusual orders are required. The usual order with respect to costs is that they should follow the event, the Court thus being left to judge the precise terms of an appropriate order in the circumstances which eventuate in the judgment.

12   The first and major qualification to this principle arises where an offer of compromise or settlement has been made which properly should not be disclosed to the Court prior to judgment. Although the substance of the offer should not be disclosed, there is usually no difficulty in indicating, at least in this Court, that some form of offer has been made and that, accordingly, questions of costs may need to be reserved so that relevant material can be put to the Court, depending on the outcome and in the event that the parties cannot agree on the appropriate result.

Secondly, there are complex cases which involve interconnected issues and possibly multiple parties. Where different parties are ultimately partly successful only, submissions as to costs may need to follow the handing down of judgment.

However, even in these cases, the Court should be entitled to act on the basis that resolution of the issue is not intended to be the subject of further submissions, unless a contrary position has been indicated at the hearing.

The burden on the Court of applications to address further in relation to costs after judgment is significant. Inadvertence on the part of the legal representatives will generally not be a sufficient basis for permitting further submissions, even in writing, and certainly not a basis for a further hearing, as appears to have been proposed in the present case.

13   The expeditious despatch of the business of the Court depends to a significant extent on the Court being able to rely upon practitioners appearing before it to ensure that its attention is drawn to matters relevant to the determination of the proceedings.

[Emphasis added]

The above authority was cited with approval by the WA Court of Appeal in Stambulich v Ekamper [No 4] [2008] WASCA 189 at [9].