SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
CLONE PTY LTD v PLAYERS PTY LTD (No 14)
[2025] SASC 109
Reasons for the Orders of the Honourable Auxiliary Associate Justice Norman
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - INTEREST ON COSTS
Application for interest on the applicant’s costs to be awarded from the date of payments of costs to its solicitors – consideration as to the principles relating to the award of interest on costs – rulings as to interest.
Bankruptcy Act 1966 (Cth) s 82; Civil Procedure Act 2005 (NSW); District Court Act 1991 (SA) s 40; District Court Civil Rules 2006 (SA) rr 101.16, 187; Supreme Court Act 1935 (SA) ss 30C, 114; Supreme Court Civil Rules 2006 (SA) rr 187, 188, 264, 271, referred to.
Burford v Allan [1998] SASC 6693; Chakravarti v Advertiser Newspapers Ltd (1998) 20 LSJS 44; Cilli v Abbott (1981) 53 FLR 108; Clone Pty Ltd v Players Pty Ltd (No 13) [2025] SASC 49; Doppstadt Australia v Lovick & Son Developments [2014] NSWCA 158; Drummond and Rosen Pty Ltd v Easey & Ors (No 2) [2009] NSWCA 331 ; Duke Group Ltd (in liq) v Pilmer (1998) 27 ACSR 1; Foots v Southern Cross Mine Management Pty Ltd (2007) 234 CLR 52; Hunt v RM Douglas Roofing Ltd [1990] 1 AC 398; Joseph Lahoud & Anor v Victor Lahoud & Ors [2006] NSWSC 126; Latoudis v Casey (1990) 170 CLR 534; Malaugh Holdings (No 2) Pty Ltd & Anor v Seal & Anor (No 2) [2011] SADC 37; MBP (SA) Pty Ltd v Gojic (1991) 171 CLR 657; Minister Administering the Environmental Planning and Assessment Act 1979 v Carson (1995) 35 NSWLR 342; Newton v Grand Junction Railway Co (1846) 153 ER 1133; Osborne v Kelly (1999) 75 SASR 392; Oshlak v Richmond River Council (1998) 193 CLR 72; Ramadan v ACN 098 408 176 Pty Ltd & Anor (No 3) [2024] SASCA 19; Tarlinton v Hall (1981) 38 ACTR 1; Thomas v Bunn [1981] 1 AC 362; Trevorrow v South Australia (No 6) (2008) 253 LSJS 82, considered.
CLONE PTY LTD v PLAYERS PTY LTD (No 14)
[2025] SASC 109Civil: Application
Auxiliary Associate Justice Norman
Introduction
This is the continuing taxation (as the legislation and rules considered in these reasons use both the terms adjudication and taxation, for consistency of expression the latter term will be used in these reasons) of the costs of the applicant (“Clone”) of the trial before Vanstone J in these proceedings, ultimately awarded by the High Court against the respondents (“Players”). The taxation having been concluded, the only remaining issues are Clone’s claim for interest on its costs and the costs of the taxation itself. By agreement the interest issue is being determined first.
In essence, Clone submits that it should be awarded interest accruing from the date of payment of each interim invoice rendered to it by its solicitors. It refers to various authorities relating to interest on costs and particularly as to such interest dating back to when payments were made by costs claimants to their solicitors.
Players, in contrast, submit that interest on costs should only be computed to commence from the date of the certificate of the taxing officer. They refer to various circumstances going to this issue including the role of the costs offers regime incorporated in the rules.
Background chronology
Both the substantive proceedings and the taxation of Clone’s costs have been long and complex.
Clone’s claim relates to an agreement made in August 1994 for Players to lease premises in the City of Adelaide owned by it. During 2002, a dispute arose between the parties relating to repairs to the premises and on 24 March 2004 Clone issued these proceedings against Players. They came on for hearing before Vanstone J in March 2005. After a 29-day trial, judgment was given for Clone on 22 July 2005, the Court upholding its claims on all but one issue.
Costs orders were made in favour of Clone at a hearing before Vanstone J on 18 August 2005.
Players appealed to the Full Court which on 4 July 2006 upheld Clone’s claim but overturned one aspect of the trial judge’s conclusions, and it remitted this matter. However, Players’ claim on the remitter was rejected by Vanstone J on 22 September 2006. Players then sought special leave to appeal to the High Court, but this was refused on 10 November 2006.
Orders were made by Vanstone J on 19 December 2006 that Players pay the costs of their counter-claim on a relief against forfeiture issue.
Questions of the assessment of damages proceeded throughout the latter part of 2007 and into 2008, but in October 2009 this issue was settled by the parties based on a payment, inclusive of costs, by Players to Clone.
Players complains that during this period Clone waited for a five-month period, from 10 November 2006 (the date of the High Court’s refusal to grant special leave) to 17 April 2007, to make any contact with Players on the costs issues.
On 17 April 2007, without (Players asserts) notice, Clone filed an interlocutory application seeking to dispense with the filing of a short form claim for costs (and thus proceeding immediately with a long form claim) accompanied and supported by an affidavit of its solicitor Mr Mark Hamilton, exhibiting a letter of the same date he had sent to Players’ solicitors, summarising Clone’s claim for costs and disbursements and enclosing a nine-page schedule of costs itemising this, indicating that this was prepared with the principles of the short form claim for costs in mind. The letter advised that the costs of the pre-trial and trial totalled $912,052.13 (exclusive of GST) and it indicated Clone’s confidence that during a formal taxation it would be able to claim all the fees it had incurred in the proceedings.
Players complained that the nine-page schedule did not comply with the usual form as it was in a sense a long form claim, however Clone did not proceed with its application. Instead, following 17 April 2007 (a period of seven months) it prepared a short form schedule, which it filed and served on 23 November 2007.
On 21 December 2007, Players filed and served a reply to this short form claim. It asserts that it requested Clone to allow its costs counsel, Mr Cogan, to inspect its files stating that its intention was to make an offer to resolve Clone’s claim without the need for a formal taxation, but that Clone failed to respond to this request, and the first time that it was addressed was at a hearing on 25 January 2008.
At this hearing, Judge Withers ordered that Clone’s application to proceed immediately to a long form bill for costs, together with Players’ application for a preliminary determination of issues, be both listed for argument on 13 February 2008. Players later complained as to Clone having submitted at this hearing that under the Supreme Court Civil Rules 2006 (SA) (“the 2006 Rules”) they were no longer entitled to have Mr Cogan inspect their files, because a response had been filed to the short form claim, and that this refusal to consent was counterproductive. However, Judge Withers directed that Mr Cogan be permitted to inspect the documents supporting Clone’s claim for costs before that date.
On 6 February 2008, Clone wrote to Players referring to Judge Withers orders, noting the parties’ positions, and confirming arrangements for Mr Cogan to inspect Clone’s files. Clone indicated that it had retained senior counsel given the importance of the principles involved in the application.
Later the same day, Players wrote a long letter to Clone. Its contents are of importance to an issue which they now rely on.
The letter summarised the interactions between the parties concerning costs to that date, stating that Players had been clear throughout about their intentions, that they had acted consistently and had always wanted to receive Clone’s claim, inspect its files, and make an offer, and that far from seeking to prevent Clone’s claim, they had taken positive steps to resolve it by seeking inspection of its files, but that Clone had failed to provide any response to this request. Instead, the first time it had addressed the request was at the 25 January 2008 hearing. Had it approached this issue in a reasonable and commonsense way as was required by the then rules, it should have immediately arranged Players’ inspection of its files. This would have been completed, an offer made to Clone, and a resolution of its costs achieved before the 25 January 2008 hearing, and this would have avoided the work which Players had had to undertake.
The letter stated that should Clone’s claim for costs not settle before the argument date, and should it not be willing to enter into further negotiations, Players would take the view that settlement negotiations had been exhausted, in which case it would be appropriate for Clone to proceed to an itemised schedule, as was consistent with the then rules, the thrust of which were to explore all avenues available for resolving cost claims before they proceeded to an expensive and time consuming process of drawing an itemised schedule of costs and proceeding to a detailed costs taxation.
The real issues at that time, Players contended, were when should Clone be entitled to proceed with the preparation of an itemised schedule, whether it should be entitled ultimately to claim the drawing fee, and who should pay the costs of the application to dispense with the short form bill. The answers to these questions were that Clone would be entitled to proceed with the preparation of an itemised schedule once all reasonable settlement avenues had been explored, but it should not be entitled to the drawing fee of an itemised schedule if the costs to which it was ultimately entitled in a detailed taxation did not exceed the offer; and thirdly, that it should pay Players’ costs of the dispensation with the short form claim application on an indemnity basis or, in the alternative, on a solicitor and client basis.
In the event, the argument fixed for 13 February 2008 did not proceed and on 11 March 2008 an itemised long form claim for costs was filed. The taxation then commenced before Master Withers and was being progressed between 2008 and 2009. However, this was suspended when Players brought an application on 17 December 2010 seeking a re-trial and it issued fresh proceedings to set aside the judgment, alleging malpractice. The institution of these proceedings had the effect of occasioning a delay in the taxation for several years.
Subsequently, both Hargrave AJ, who heard a second trial, and most of a second Full Court, held that the misconduct was a sufficient basis to enliven a discretionary power to set aside the original judgment as varied by the Full Court. Clone appealed against this finding to the High Court, which in March 2018 allowed the appeal, set aside the orders of Hargrave AJ, and ordered that Players pay Clone’s costs. The proceedings accordingly spread over 14 years until they concluded in the High Court.
The taxation resumed before me in 2018. It has been confined to the trial before Vanstone J. This process has been equally long and complex, relating back to costs incurred from early 2004. At times, the parties conferred and agreed items but the majority had to be argued and rulings were given on many issues. It was concluded last year.
The amounts claimed by Clone and ultimately awarded on the taxation have been agreed as follows:
Solicitors’ fees Claimed $377,711.85 Allowed $207,826.77
Counsel fees Claimed $414,472.30 Allowed $324,166.53Disbursements Claimed $134,378.20 Allowed $ 98,431.53
Totals Claimed $926,562.35 Allowed $630,424.81
Since the conclusion of the taxation, the Court has been dealing with the issue of interest on Clone’s costs. The remaining issue will relate to the costs of taxation.
Initially, a dispute arose as to the mechanism for the interest issue. The Court was informed that following the service of Clone’s claim for costs, Players had served three offers for those costs, including interest thereon. Players sought a “two stage” process wherein a determination should first be made as to the point in time when Clone’s entitlement to interest commenced to run and, secondly, after that determination, and based on the Court’s ruling, calculations could be made as to Clone’s actual interest on its costs entitlement, relying on the amounts allowed for solicitors’ charges, counsel fees and disbursements up to and including the date of the offers.
After those determinations, Players sought a separate hearing to determine two further issues: first, whether Players had relevantly beaten any of their three offers, and secondly, if they had, what should be the consequences in relation to the period after the date of those offers until finalisation. Clone opposed this two‑stage process, contending there was no utility in a splitting of the hearing and sought that all matters should be determined together.
After argument, I published reasons Clone Pty Ltd v Players Pty Ltd (No 13),[1] ordering on 11 April 2025 that the award and assessment of interest was to be undertaken in two separate hearings, as had been sought by Players.
[1] [2025] SASC 49.
Following that determination, the parties filed written submissions as to the first issue and then at a hearing on 23 May 2025 when Mr B Roberts KC with Mr W Ericson of counsel appeared for Clone, and Mr RJ Whitington KC with Mr J Whitington of counsel appeared for Players, I heard oral submissions and reserved my decision.
Clone’s claim for interest and Players’ position
In essence, Clone’s claim is that it should be awarded interest accruing from the date of payment of each interim invoice until present. Relevant calculations to 30 November 2008 or 20 February 2008 relating to the date of the offers) are set out in a schedule to its written submissions. This provides that it should be awarded interest accruing from the date of payment of each interim invoice presented to it by its former solicitors until present. Its calculations to 30 November 2008 or alternatively to 20 February 2008 are set out in Schedule 1 as follows and result in a total interest claim of $142,032.01 (calculated to 30 November 2008), or $106,276.32 (calculated to 20 February 2008).
In the alternative, it seeks interest from the date of the costs order until present. Its calculations from 18 August 2005 to 20 February 2008 (alternatively to 30 November 2008) relating to interest and the costs award are as follows:
The rate of 6.5 per cent is based on r 84.19 of the Supreme Court Rules 1987 (SA) (“the 1987 Rules”) which prescribes an interest rate of 6.5 per cent from 2 August 2004 according to Item 22 of Schedule 3 until 1 October 2008 when the 2006 Rules took effect. The rate of 10 per cent commenced on 11 October 2008 when the 2006 Rules took effect. Later, the interest rate fluctuated and was to be calculated by reference to the prevailing Reserve Bank cash rate.
Players, on the other hand, submit that interest on costs should only be computed to commence from the date of the certificate of the taxing officer.
Affidavit material received by the Court
For the purposes of the present argument, affidavits have been filed by the parties relating to two issues.
The first issue relates to evidence from Clone of payments made by it to its solicitors during the proceedings. It filed two affidavits of its solicitor Ms Dana Paitaridis, who testifies as to invoices rendered to it by its former solicitors, Grope Hamilton, together with counsel fee invoices, payment and disbursement payment receipts and summarising and exhibiting these documents. It has also filed an affidavit of Mr Mark Hamilton, its former solicitor, who likewise testifies as to the payment of accounts rendered to Clone by its then solicitors and exhibiting relevant documents. These affidavits and their exhibits provide the evidence used for the calculations made by Clone as to its interest claim.
The second issue relates to endeavours made by Players to ascertain details of Clone’s costs claim and to expedite the taxation process following the conclusion of the first trial. An affidavit of Players’ solicitor, Mr John Whitington, incorporates a chronology of events relevant to the taxation of costs and exhibits correspondence between the solicitors for the parties. These matters are incorporated into the background chronology referred to earlier in these reasons.
Clone’s submissions
In Clone’s written submissions it seeks interest computed from the date of payment of each invoice rendered by its solicitors until the present day. Noting the bifurcation of the interest issue by reason of my orders dated 11 April 2025, and consistent with that ruling, it submits that nevertheless there is no proper basis to artificially narrow the circumstances in which the Court’s discretion under s 114(2)(b) of the Supreme Court Act 1935 (SA) is to be exercised. It would be an error of principle, it submits, for the question of interest in stage one to be viewed in isolation from the considerations that would otherwise apply in respect of interest to the present date.
Clone submits that the section calls for the exercise of a single discretion in respect of interest and for all relevant circumstances to be considered. To confine this exercise during stage one divorced from the considerations in respect of stage two would be erroneous, so the Court could and should consider the claim for interest from the date of payment until now, even if at the conclusion of this process, Players will be heard on the question of whether any offer might otherwise affect the outcome that would have otherwise apply to stage two.
To do otherwise and focus on a short period up until to 2008 in isolation would distort the exercise of the discretion. Clone’s claim for interest was to be assessed in a context where it had been kept out of its money for more than 20 years. This should be given very material weight, which could not be lost by undue emphasis being given to the short period confined to stage one. Players’ set aside proceedings delayed the taxation for about eight years and was wholly unsuccessful, so as a result Clone had been kept out of its money over this time as a result. The effect of inflation over 20 years delay in recovery would significantly affect the value of its costs award, so interest relating back to the date of payments was necessary to do justice where the delay has been so long, and had been caused by Players’ failed attempts to appeal.
The overriding objective of an award of interest was to compensate a party for being kept out of the use of its money, so an award of interest on costs had the same purpose as interest on damages prior to judgment. The law presumed that Players had benefited from the use of the money ultimately ordered to be paid by it and they had been able to earn interest on the amount not paid earlier in time, so they either had the use of the money or had not been burdened by having to borrow money on which they would have had to pay interest.
Clone referred to the provisions of s 114 of the Supreme Court Act and to various authorities on the above propositions, to the effect that if an applicant had already paid legal costs or disbursements there may be a sound basis for the exercise of the discretion to fix an earlier date from which interest was to run. The legislation and case law will be discussed later in these reasons.
It submitted that the appropriate rate for interest on costs was the post‑judgment rate, and it referred to the various interest rate provisions in the rules. It contended that by reason of the “split” nature of the assessment of interest that had been ordered, the relevant “end point” at which calculations were to stop would be 20 February 2008 being the date of the costs offers (at the earliest) and 30 November 2008 (namely the lapsing of the offers pursuant to the rules), at the latest.
It submitted that the following approach should be taken.
First, regard should be taken of the fact that it had made payment to its solicitors on account of invoices rendered by them periodically from 2004. It should accordingly be compensated from the date of payments of its costs, and for the further reason that the delay had been occasioned by Players’ conduct in their failed applications and appeals and by innumerable difficulties in the conduct of the balance of the taxation.
Secondly, and for “Stage 1” purposes only, Clone should receive interest from the time that interim bills were paid by it until whatever date was identified by the Court as being the end of Stage 1 (30 November 2008, or 20 February 2008).
As a further reason for its claim for backdating interest, Clone referred to the benefit to Players of a delay of nearly a decade by reason of Hargrave AJ’s judgment. By the Court’s orders of 9 November 2015, it had been ordered to refund all monies paid to it by Players in relation to the Vanstone J trial and the 2006 Full Court Appeal, together with interest. In consequence, on 17 November 2015, it had paid a refund of $274,882.09 to Players. Then, in 2018, when the High Court reinstated the original allocators in Clone’s favour, Players had returned the refunded amount, plus accrued interest on the 2018 refund.
In his oral submissions, Mr Roberts accepted that Players’ offers and their significance would be deferred until Stage 2, however he reiterated his written submissions as to the 20-year delay since the institution of Clone’s claim and the evidence as to payments made by it to its solicitors over this time.
He also referred to the 1991 amendment to s 114 providing an express power to award interest from a date earlier than the date of certification of the taxing officer. This was explicit in the language of the section, notwithstanding that it was the certification of the taxing officer that crystalised the monetary obligation. Necessarily a monetary judgment was only quantified once a certification was given, however the fact was that Parliament had seen fit to infer a discretion to permit interest from an earlier date.
He likewise analysed the case law relating to interest on costs, adding the need for caution in relation to case law from the United Kingdom, New South Wales, and other jurisdictions, although they were generally or all in Clone’s favour, as they likewise provided instances of relating back to the date of payment for the purpose of an award of interest.
He disputed any assertion that the discretion to award interest on costs prior to the date of the taxation certificate had to be confined and that it required a particular and proper basis to depart from the prima facie position. The Full Court had found that the discretion was unfettered. The approach to take in this instance was to simply apply what the Full Court had said was appropriate, this being an award of interest from that earlier point.
Players’ submissions
Players noted that the central issues for determination concerned the date from which interest on taxed costs should commence, up and until the date of the offers, and then the effect of filed offers to pay costs, inclusive of interest, in respect of Clone’s entitlement to such interest, if any, based on the Court’s ruling that it would decide issues of law or principle before the offer was opened.
Their case was that interest on costs should only commence to run from the date of the certificate of the taxing officer. A claim for interest from an earlier date required establishing proper grounds for a favourable exercise of the discretion, having regard to all the circumstances of the case and the interests of justice. They likewise referred to authorities pertaining to the issue.
They accepted the accuracy of the principal amounts allowed for respectively solicitors fees, counsel fees, and non-counsel disbursements as set out in Clone’s submissions, the rate of interest, and the accuracy of the gross interest calculation in the first table of Clone’s submissions for the period to 20 February 2008, while noting that the 11 April 2025 order had contemplated individual interest calculations for each of respectively solicitors fees, counsel fees, and non-counsel disbursements, this being important because the offer in fact contained three separate components, each of which were capable of individual acceptance.
They confirmed that both parties were proceeding on the basis that the entitlement to interest, if any, was to be pursued and to be determined under the 2006 Rules, noting that because the repealed 2006 Rules continued to apply to offers made before 1 December 2015 (the offers here were made on 20 February 2008) the provisions of rr 187 and 188 of the 2006 Rules were pertinent.
These were discussed, as were the provisions of the Supreme Court Act s 30C, referring to interest in favour of a judgment creditor, and s 114, referring to interest payable under any judgment or order including as to costs.
While s 114(2)(b) might suggest that an allowance for interest might be included in taxed costs from a date earlier than the date of the certificate of the taxing officer, it was submitted that properly considered this was directed at interest on judgment debts (post-judgment interest) so the qualified power referred to should be interpreted and applied in that legislative context. The natural starting point for interest was accordingly to be the date of issue of the certificate of the taxation. While the order for payment of costs might make costs payable, it was the taxation which quantified them and made them due and payable.
The present dispute concerned three periods, the first from the payment of costs by Clone to its solicitors to the date of the costs order of 18 August 2005, the second was from that date to the date of the offers made on 20 February 2008, and the third being the period thereafter to the present day. Stage 1 of the argument only concerned the first two periods above.
Players submitted that Clone’s contentions that offers relating to costs claims could only be relevant to costs, not interest, that offers of costs plus interest were irrelevant to the question of its liability for interest on costs, and that an offer made during a taxation including interest might affect the appropriate determination as to costs of the taxation itself but it could not affect or influence a past or continuing entitlement to interest, were radically inconsistent with s114.
Further, the very fact that r 264(7) of the 2006 Rules expressly provided for the Court to include an amount representing interest in a certificate of taxed costs – namely an “award of costs” – showed that Clone’s contention was incorrect. All its contentions had to be considered and evaluated in the light of this fundamental misconception.
Players submitted that the basic principle governing interest to a party recovering a money judgment was that it was not compensation for damage done but rather recompense for being kept out of money which should have been paid earlier.[2] This principle was directed primarily at pre-judgment interest, but it also had general application to post-judgment interest. Until judgment was entered for a successful party, costs were ordinarily a mere speculation and not even a contingent liability.[3] This explained that the necessary starting point in s 114(2)(b) was that interest should only commence to run from the date of the certificate of the taxing officer. The wider discretion introduced by s 114, and explained in Osborne v Kelly by Doyle CJ,[4] did not alter the fundamental proposition endorsed by the High Court in Foots that costs before judgment were a mere speculation. Therefore, it could not be said that they ought to have been paid to Clone before they were settled both in liability and quantum. The fixing of the latter only occurred by the issue of the taxing certificate.[5]
[3] Foots v Southern Cross Mine Management Pty Ltd (2007) 234 CLR 52, where the High Court had referred to costs ordered as constituting a mere speculation and not even a contingent liability.
[4] (1999) 75 SASR 392 at 393.
[5] Osborne v Kelly (1999) 75 SASR 392 at 393-394, 397, 405 (Doyle CJ).
Clone’s first claim period was a payment to the date of the costs order. Having regard to the principle in Foots, Players submitted, there should be no entitlement to interest on costs prior to the resolution of the proceedings, and this had to extend beyond the date of the costs order of Vanstone J to the date of delivery of the judgment of the Full Court on 24 April 2006 by reason of the latter’s rulings on the appeal and the counterclaim.
With respect to Clone’s second claim period, that being to the date of the offer on 20 February 2008, there was likewise no entitlement to interest because the liability for costs had not been quantified by a taxation. Further, if the Court was against this argument, then the delay by Clone in advancing a verifiable claim for quantified costs as was evidenced in Mr Whitington’s affidavit was relevant. At the very worst for Players, they could not fairly and reasonably be expected to have made any payment on account of costs ordered in favour of Clone before they were provided with the costs claim in compliance with the requirements of the rules.
With respect to the third claim period, namely after 20 February 2008, Players’ position was that likewise during for period, absent special reason, there should be no entitlement to costs until after the issue of the taxing certificate.
In the alternative, Players submitted, any exercise of the power to award interest on costs from an earlier date should be approached having regard to the reasonableness of the conduct of the parties on each side of the record. When the offers were revealed, they would demonstrate that it was more than reasonable of them to include a component of interest in their terms, and that it was unreasonable for Clone not to have accepted the offers. Should it be found, ultimately, that Clone had failed unreasonably to accept the offers (which included interest) then it should not be entitled to interest in respect of the period after 20 February 2008 both as a matter of causation and, also in the proper exercise of the Court’s discretion. Necessarily, both parties had been proceeding in a state of uncertainty as to the quantum of costs which might be ultimately awarded, and thus uncertainty as to both the principles and the basis on which interest, if at all, might be awarded. This problem was one of inevitable uncertainty as the High Court had made plain in Foots. Nonetheless, the question of reasonableness was to be viewed as at the time for acceptance of the offer in the light of all material available to the Court at the time of the assessment of interest, including in that the outcome of the taxation.
Players disputed Clone’s claim for nine-month’s interest until 30 November 2008, saying there was no legal principle justifying such an extended period.
In summary, their submission was that Clone should not be entitled to interest on costs, if at all, for any period before the date of the taxation certificate.
In his oral submissions, Mr Whitington clarified that the crystallisation of a monetary sum on the taxation was not relied upon by Players as a suggestion that it was not open to the Court to make a post-dated or back dated interest calculation having regard to the provisions of s 114, but he submitted instead that it was a relevant discretionary factor to be weighed in coming to the Court’s decision.
Players’ fundamental proposition concerning the application was that costs offers were relevant to claims for interest on costs, and that the regime allowing these informed the approach the Court should take to its undoubted discretion under the section, referring in this regard to Osborne where Doyle CJ at [35] noted the possibility of the existence of other factors that might support a contrary decision, such as the fact of payment of costs by a party to its solicitors as the matter progressed. Foots had a bearing on the question of the interaction between the costs regime and the obligation to pay costs and in consequence the question of when interest would start to run. A party could not make an offer until it was bound by an order for costs and, further, until there had been some sensible quantification as to what the costs might be.
Clone had contended for a starting point for interest to run at a time preceding Vanstone J’s costs order on simplistic basis that the authorities recognised the relevance of the fact of payment to the exercise of the discretion under the section However, this was merely one circumstance which might justify the timing of an award of interest on costs.
There were other factors which had a bearing on Clone’s interest claim. These included the relevance of the regime of costs offers, the fact of a considerable reduction in the taxation of the amount awarded to Clone, the likelihood that numerous payments had been made by Clone after the date of the costs order, delay by Clone in serving its costs claim, and Clones submissions as to the date to be allowed to it for acceptance of Players’ offers. These were addressed in turn.
The first matter was the regime of costs offers.
It was relevant that the party paying costs would not know until taxation the amount to be paid, even though this might be said to be after the event. This was so because the applicable 2006 Rules, rr 187 and 188, envisaged an ability in a party liable for costs to make an offer for same. This necessarily meant that the fact of incurring costs in a definite amount during an earlier period could not be decisive in exercising the discretion, as appeared to be Clone’s contention. Rule 187, as it provided at the time, allowed a party to file an offer of settlement before the relevant date. Sub-rule 187(2)(b) provided that if the offer related only to costs and related only to a taxation, the relevant date was that falling two days before the date appointed for the taxation. What this was speaking of was a flexible period by the end of which an offer in relation to costs only might be made. Sub‑rule 187(3)(c) relevantly provided that the offer must state if it related to costs and if so the amount of the offer so far as it related to costs. Rule 188 dealt with acceptance of offers. Sub-rule(1)(a) related to the acceptance of an offer before the relevant date and sub-rule (2) provided that in sub-rule (2)(b) if the offer related only to costs and was made in proceedings relating to the taxation of costs the relevant date was two days before the date appointed for the taxation.
There were two points to be made about these rules. The first was of real significance as to the consideration of the answer to the first paragraph of the 11 April 2025 orders. They contemplated a party being given the opportunity of making an offer on costs to meet an obligation and to prevent any potential interest running. While actual payment by the successful party might be one legitimate consideration, the ability of the unsuccessful party to know what was to be paid and how to make a sensible offer was another, this was a highly relevant consideration. In the 6 February 2008 letter from Players to Clone, the need for being given proper notice of the costs, the requirements of r 271(1)(a) of the 2006 Rules prior to the taxation, and the obligation of the applicant to provide a response pursuant to sub-rule (4), had been pointed out to Clone. It was clearly contemplated from this regime that a party liable for costs was to be given clear and sufficient notice of the costs claim to enable it to make an offer. The corollary was that if there was insufficient compliance, this should affect the claimant’s entitlement to recover interest when the costs were ultimately fixed.
None of the authorities went so far, and certainly not Clone in the present case, had factored in the importance of allowing a party which had to pay costs with the opportunity to exercise their rights under the rules to make a costs offer, and then only once they had been properly informed.
Players’ submission was that the Court should determine under the 11 April 2005 order 1(a) that Clone’s entitlement to interest ran from no earlier than 20 February 2008, when Players’ offer was made, or, if from an earlier date, from 23 November 2007 when the short form claim was served. Were the position to be otherwise, this would make a nonsense of the whole offer process, because until a party could avail itself of that process, it could not protect its position by making an offer to pay costs and potentially including interest up to that point. Finally, were it the case that offers were not relevant, and the fact of an offer was to be ignored, a party in Clone’s position could simply come to the taxation and say years after the event that as it had been awarded costs and that it could now claim interest from an earlier date over the whole of the intervening period. This would render nugatory the costs offer regime.
The second matter was that offers for costs can include interest.
Addressing the provisions of s 30C and s 114 of the Supreme Court Act, Mr Whitington submitted that an order for payment of costs including pursuant to a taxation certificate might include both a pecuniary amount and interest in a costs award under s 30C.
The third matter was the considerable reduction in the taxation of the amount awarded to Clone.
The fact of an actual payment of costs here was complicated by the circumstance that a payment on account of a particular item might only be recognised in the taxation by an award of a lesser sum, as had occurred here – of Clone’s total claim for costs for $926,562, those allowed on taxation amounted to only $630,427, a reduction of 33 per cent.
The fourth matter was the likelihood that numerous payments had been made by Clone after the date of the costs order
Of importance to this issue was an analysis made by Players of Schedule 1 to Clone’s submissions which calculated interest to the offers date 20 February 2008 from an asserted date of payment. However, importantly, it appeared that most of Clone’s claims for solicitors’ fees and non-counsel disbursements had been paid after the date of the costs order. Explaining this, Mr Whitington provided a Scenario C which he said the Court should consider alongside Clone’s calculations appearing in Schedule 1 of its own submissions. The Scenario showed interest calculations from the date of the costs order to the date of service of Players’ offers. The solicitors’ fees allowed on taxation were $207,826.77 so on the agreed approach to interest from 18 August 2005 to 20 February 2008, this would amount to $33,938.40, on the basis that all the costs had been incurred by the former date. However, when this was compared with Clone’s Schedule 1, the equivalent interest amount claim was only $30,557.00 – because Clone had obtained a lesser amount from Players in the taxation. This demonstrated that a significant proportion of Clone’s actual payments must have been made after 18 August 2005, because Players’ calculation was dated from 18 August 2005. As a matter of logic having regard to the fact that Clone had calculated a lesser sum, one could infer that it could not have included in its calculation a significant number of charges prior to 18 August 2005. It followed that most of Clone’s costs for which it made claim in relation to solicitors’ fees must have been incurred after 18 August 2005. The same approach could be taken in relation to disbursements other than counsel fees. Clone’s calculation was $14,832.00, whereas Players’ calculation in Scenario C was $16,000.00 (again this was computed from 18 August 2005), and it was greater than Clone’s calculation, so once again it was reasonable to infer that if Clone’s interest calculation was lower than Players, then again, most of Clone’s costs for such disbursements must have been incurred after 18 August 2005.
Mr Whitington acknowledged that the position did not apply in relation to counsel fees. Players’ calculation was for $52,936, from 18 August 2005, whereas Clone’s figure of $60,886 was higher, so it was reasonable to infer that some part at least of the counsel fees had been paid before 18 August 2005.
This all indicated that the Court should look to some other and later starting point than 18 August 2005. To award Clone interest on such payments as if they had all been made by the date of the costs order would confer on it a windfall gain, at least in respect of the components representing solicitors’ costs and non-counsel fee disbursements. The point of the submission was that one had to be very careful about assuming that there had been significant payments made by Clone before the date of the costs order. This was itself a matter of some complexity and should cause the Court to pause in going back beyond the date of the order.
The fifth matter was the delay by Clone in submitting its costs claim.
Players noted that between 10 November 2006, the date of the High Court’s refusal to grant special leave, and 17 April 2007 – a period of five months – Clone had failed to make any contact with Players as to its costs claim. Clone had applied on 17 April 2007 to seek dispensation from its obligation to file a short form claim but it had later abandoned this application, and it was not until 23 November 2007 – a further seven-month period – that it had filed a short form claim. This meant that Players was for approximately one year denied the opportunity to assess the adequacy and efficacy of Clone’s claim, and to respond in the manner contemplated by the rules in the intervening period. Players had promptly filed a response, on 21 December 2007, and followed this by offers on 20 February 2008. These matters could be considered in respect of an award of interest.
The final matter was the date for acceptance of the offers by Clone
Players noted Clone’s assertion, it relying on r 188(2)(b) of the 2006 Rules and saying that if Players’ offer related only to costs and was made in proceedings relating only to the taxation, it had until two clear business days before the date appointed for the taxation namely 30 November 2008 (the taxation date had been fixed for 2 December 2008) to accept the offer. This was notwithstanding that Players had made their offer very much earlier, on 20 February 2008. However, the Court should not read these provisions without context. The purpose of the rule allowing an offer to be accepted within two clear business days before the date appointed for the taxation worked in conjunction with the provision in r 187 of the 2006 Rules relating to the final day upon which an offer for costs only might be made, so that rule should not be read as allowing, in effect, an unlimited time between the date of an offer and the taxation for a party (here a party in the position of Clone) to consider whether it should accept the offer.
In other words, r 188(2)(b) of the 2006 Rules was a kind of default cutoff date for reliance, rather than an automatic concession of delay. If Players was wrong that in this case interest should run from the taxation certificate and it was to run from an earlier date, then in its submission the earlier date should be no earlier than 20 February 2008, or possibly earlier, namely on 23 November 2007 when the short form claim was filed and served.
Clone’s submissions in response
In its response, Clone clarified the date upon which it submitted that the Court should use for the purpose of the offers. Two dates had been suggested. Rule 188(2)(b) provided that an offer could not be accepted until the “relevant date”, and in the case of an offer relating only to costs this was two days before the date of the taxation. The taxation had been listed for hearing on 2 December 2008, so accordingly, the relevant date for the purpose of Clone accepting the offer was 28 November 2008. This was why that date was identified as being the second date. It had utilised the first date of 20 February 2008 because this was the date of the offer itself. It submitted that there would be utility, given the way that Players wished to proceed with a decision dependent on the offer, if it could simply award interest by reference to both dates, so whatever might be made of the offer could be made of it in that context.
Responding to Players’ contentions that cost offers were relevant to the question or calculation of interest on costs which should disentitle Clone to interest, it submitted that these contentions were flawed and should not be countenanced. The cost offers were not at all relevant to interest, as distinct from the costs of the taxation. Players’ contention was contrary to the rules, unsupported by authority, and flawed in principle. The offers were irrelevant to the determination of the date from which interest accrued, although Clone accepted that for present purposes the first of these points would need to await another date, if it was ever to be applied. Similarly, the attempt to descend into a retrospective examination of the lengthy and complex history of the matter by dissecting and isolating its discreet components asserting that such matters had a bearing on Clone’s interest entitlement was erroneous, particularly where doing so would involve a substantive examination of the merits of the applications, positions and tactical decisions adopted by the parties. Any assessment as to interest had to be assessed holistically and not in any form of segmented artificial manner.
Players’ submissions based the events occurring in the period between the failed High Court special leave application and Clone filing its short form claim, which they had contended comprised a material delay which should disentitle it an entitlement to interest, related only to a one-year period, comprising less than five per cent of the overall time the matter had been afoot. What had occurred during this period was that Clone had sought to dispense with the filing of a short form claim for its costs and instead proceeding straight to a long form claim. However, this had never been argued or substantively considered. Rather it was adjourned by consent in April 2007 and again in February 2008. Players could not now assert that the adjourned period was a relevant “delay”, as this would retrospectively take advantage of mutual timetabling decisions regarding the progression of a series of interrelated matters when the matter more broadly was proceeding. Further, when Players had briefed Mr Cogan to represent it, on 11 March 2008 he had agreed that it was appropriate that the parties proceed to a long form taxation, thereby vindicating Clone’s application. Even were it the common position that the parties should proceed to a long form bill, any delay occasioned by the dispensation of the short form bill could only be relevant if Players could establish that this ultimately delayed the taxation, which it could not establish.
First, Players’ application to set aside the Court’s judgment had halted the taxation when it was nowhere near finishing. Secondly, there was no evidence of prejudice or that Players could or would have acted differently were the matter to have proceeded through the short form process at an earlier time. This could only ever be relevant if the Court were satisfied that material concessions would have been made in respect of the short form bill, materially shortening the conclusion of the matter and the taxation generally. Thirdly, any suggestion that the taxation would have been shortened could be rejected for several reasons: despite Clone having agitated its costs entitlements throughout most of 2007, as at 25 January 2008, Players had not inspected any documents supporting the short form claim and when it was filed, it was objected to it in totality; consistent with the history of the matter, when the long form bill was delivered there were very limited concessions and Players put the majority of items in issue; and finally when the taxation did resume in 2018, it took over seven years, involving at least 75 hearings and had involved disputes about almost every item, resulting in at least 12 judgments regarding the taxation alone.
Further, the proceedings had been ongoing in the period after 10 November 2006 when the High Court dismissed Players’ application for special leave, so it was not a case whereby the matter was wholly concluded and there had been a material delay between that conclusion and the recovery of costs. The parties had consented to the adjournment of costs issues while the case was otherwise proceeding. Because the case was ongoing, there was disruption to the work of Clone’s lawyers in marshalling the file for taxation purposes while other aspects of the case were still ongoing, and the file remained connected to the prosecution of the related issues. Providing access to privileged materials within Clone’s solicitors’ file to substantiate the costs claim would have exposed Clone to a material risk of waiver of privilege at a time when the litigation was ongoing, and it was well accepted that a taxation during the currency of proceedings was to be regarded as an exception rather than the norm.
The Court should reject the contention that there was relevant delay in the commencement of the taxation. On any view, it would not have been concluded before the pause in hostilities between the parties by virtue of the nine-or-so years being expended on the application to set aside judgment. It had taken many years thereafter to get to the position of Clone seeking interest on its costs. The six‑month period referred to by Players would not have sounded in a payment by it before the matter went to the High Court. Even if there had been a six-month delay, it had not changed anything in the circumstances of the case.
A broad view should be taken when assessing the causative effect of the delay in the taxation of costs, which lay squarely on Players’ failed attempts to set aside the initial judgment.
Finally, Clone responded to Players’ submissions founded on the Foots decision that costs were a speculation and not a contingent liability. That case involved s 82 of the Bankruptcy Act1966 (Cth) and determined a question unique to that Act, namely whether a costs award made after the date of bankruptcy was a provable debt in bankruptcy. Clone was not submitting that Players were liable to pay any amount for costs before the costs order. What it was submitting was that the compensatory principle required that Clone needed to be compensated for its being out of pocket in paying costs as the matter proceeded – this was the correct focus. The fact was that the preponderance of Clone’s costs had been paid beforehand, and the exercise was simply a matter of going back to when Clone had made payments and thereby was out-of-pocket, and it needed to be compensated for this. Clone further observed that in in Osborne v Kelly, the Full Court wrote that the taxing officer had fallen to error by focusing upon the date at which the sum to be payable in respect of costs should have been known, Doyle CJ saying at [59] that this did not properly take account of the fact that payment to lawyers had been made earlier.
Players, Clone submitted, was advocating for the wrong focus by looking at the time when there was a sum that was quantifiable or crystallised.
Legislation, rules and caselaw
The overriding objective of an award of interest is to compensate a party for being kept out of the use of their money.[6]
[6] Trevorrow v South Australia (No 6) (2008) 253 LSJS 82; Joseph Lahoud & Anor v Victor Lahoud & Ors [2006] NSWSC 126 at [82]-[83] per Campbell J; MBP (SA) Pty Ltd v Gojic (1991) 171 CLR 657 at 663.
The Supreme Court Act includes a power to award interest in respect of a judgment in two places.
The first is s 30C which refers to including an award of interest in favour of a judgment creditor. The text of the section clearly assumes that it is addressing pre-judgment interest. The basic principle governing the award of interest to a party who recovers a money judgment is that interest is not compensation for damage done, but rather recompense to a plaintiff for being kept out of money which should have been paid earlier.[7] Although this is a principle directed primarily at pre-judgment interest, it also has general application to post-judgment interest.
The second provision is included in s 114 which refers to interest payable under any judgment or order including as to costs.
The heading of s 114 “Interest on judgment debts” clearly prima facie deals with post-judgment interest. This is consistent with the approach of the Court of Appeal in Ramadan v ACN 098 408 176 Pty Ltd & Anor(No 3).[8] Clearly, it also deals with interest on costs.
[8] [2024] SASCA 19 at [19]-[20].
Section 114(2) originally only prescribed that the taxing officer could award interest on costs from the date of the certificate. However, in 1991 this provision was amended by Parliament to include a wider discretion. The section then provided:
Section 114 – Interest on judgment debts
(1) All money, including costs, payable under any judgment or order shall bear interest at the rate from time to time prescribed by the rules of court.
(2) The interest shall be computed from the following times:
(a) in the case of money other than adjudicated costs, from the time specified in the judgment or order, and if no time is so specified from the date of the judgment or order;
(b) in the case of adjudicated costs, from the date of the certificate of the adjudicating officer by whom the costs were adjudicated or an earlier date specified by the adjudicating officer in the certificate.
(emphasis added)
There are similar provisions in other States. An article published by “Interest on Costs Regimes” [2017] by Phillipa Alexander, discusses similar legislative changes in New South Wales, referring to an amendment to the Civil Procedure Act 2005 (NSW) operative from 24 November 2015, and there is reference to New South Wales caselaw including Doppstadt Australia v Lovick & Son Developments.[9] In that case, Gleeson JA (Ward and Emmett JJA agreeing) stated that in the absence of any countervailing discretionary factor, it was appropriate that an order for interest on costs be made to compensate the party having the benefit of a costs order for being out of pocket in respect of relevant costs which it had paid. There was no requirement to establish that the circumstances of the case were out of the ordinary.[10] The learned author of the article indicated that countervailing factors might include vacated hearing dates, unsuccessful interlocutory arguments, or other factors resulting in adverse costs orders, disproportion between the costs and quantum of the claim, and costs incurred in respect of matters which were abandoned or unsuccessful.
[9] [2014] NSWCA 158 at [403].
[10] Referring to Drummond and Rosen Pty Ltd v Easey & Ors (No 2) [2009] NSWCA 331 at [4] per Macfarlan JA (Tobias JA agreeing) citing Lahoud v Lahoud [2006] NSWCA 126 at [82]-[83] per Campbell J.
The parties here have discussed several South Australian cases relating to interest on costs in their submissions.
In Burford v Allan,[11] the Full Court discussed the question of interest on costs in the context of a cross-appeal. Under the sub-heading “Cross-appeal” Doyle CJ wrote:[12]
An award of costs to a litigant bears interest pursuant to s 114(1) of the Act. In the case of taxed costs, interest is computed from the date of the certificate of the taxing officer … or an earlier date specified by the taxing officer in the certificate. That provision, in my opinion, gives to the master or judge concerned a discretion. The discretion is unfettered and is to be exercised having regard to the facts and to the interests of justice.
The starting point is not an award of interest from the date of judgment by virtue of which the party is entitled to costs. There must be some basis for the exercise of the discretion to order that interest to be computed from a time earlier than the date of the certificate, and in particular to order that interest be computed from the date of the relevant judgment. All sorts of matters could be relevant to this question, including delay by the party ordered to pay costs or an unreasonable approach to the taxation of costs which causes delay. Some of the brief remarks made by the master and by the judge are capable of suggesting that the plaintiff had a right to have interest computed from the date of the judgment in her favour, subject only to the defendant establishing some reason to deprive the plaintiff of interest from that earlier date. It may be that that was not what was intended. Reference is made by the master, in particular, to other matters that would support the computation of interest from an earlier date. I immediately make the point that, in my opinion, there is no such presumption about the time from which interest is to be computed, and it is a matter of the Court being satisfied that there are proper grounds upon which interest could be computed from a date earlier than the date of the certificate, and in particular from the date of the judgment that confers the entitlement to costs.
[11] [1998] SASC 6693.
[12] [1998] SASC 6693 at 8.
In Chakravarti v Advertiser Newspapers Ltd,[13] the Full Court considered issues of the costs of the trial, the costs of a first hearing by the Full Court of a second hearing by the Full Court, and of an application by the plaintiff for an order for payment of interest on taxed costs from the date of the respective judgments. In the Court’s reasons pronounced by Doyle CJ on an ex-tempore basis, the Court at paragraph [14] referred to the provisions of s 114 of the Supreme Court Act and sub-section (2) relating to taxed costs and when interest would run. It observed at paragraph [15] and following that one view was that the effect of that provision was to commit to the taxing officer the decision as to payment of interest on the date from which it was to be paid. The Court referred to the English approach and the decisions of Hunt v RM Douglas Roofing Ltd,[14] Thomas v Bunn,[15] Minister Administering the Environmental Planning and Assessment Act 1979 v Carson.[16] It continued at [19] and following:
But it may be, and we do not have to decide this, that in South Australia the position is governed by the terms of s 114(2)(b). It may be that interest is to be payable by that provision from the date of the certificate of the taxing officer, unless the taxing officer specifies an earlier date. In any event, it is clear that the provision gives to the taxing officer a wide discretion. It is not necessary to decide the point because, in any event, we can find no reason why the Full Court should deal with the matter itself. It is a matter which ordinarily would be dealt with by a taxing officer, and there is no particular reason why the Full Court should depart from the ordinary practice.
We add, for what it is worth, that in our opinion it would not be appropriate for a taxing officer to proceed on the basis that interest will be payable from the date of judgment, unless the taxing officer is persuaded otherwise.
We say that because in our opinion, to approach the matter on that premise would be to ignore the words of the statutory provision. The statutory provision gives to the taxing officer a wide discretion, and that discretion is not to be exercised on the basis of any prima facie starting point which has to be displaced. If we are wrong in that and there is a starting point, then the starting point appears to be the date of the certificate of the taxing officer: cf Burford v Allan (1996) 189 LSJS 497 at 507 Matheson J.
[13] (1998) 20 LSJS 44.
[14] [1990] 1 AC 398.
[15] [1981] 1 AC 362 at 380.
[16] (1995) 35 NSWLR 342.
Osborne v Kelly[17] appears to be the clearest articulation of the principles. The successful plaintiff received costs after taxation of about $361,000 and claimed interest on these from the date of judgment. The Master who taxed the bill rejected the claim, allowing instead a lump sum of $18,530.09 for interest on the basis that the defendant should have acknowledged this liability and paid an amount of $250,000 the subject of an interim allocatur about 10 months sooner than he did. On review, a Judge declined to interfere.
[17] (1999) 75 SASR 392 (Doyle CJ, Mullighan and Wicks JJ).
The plaintiff then appealed by leave to the Full Court claiming interest from a date preceding the date of the trial judgment, or at least from the date of that judgment. In his reasons, Doyle CJ, with whom Mullighan and Wicks JJ concurred, referred at [6] to the provisions of s 114 noting the 1991 amendment giving power to award interest from a date earlier than the date of the certificate of the taxing officer.
Plainly, Doyle CJ observed, the section conferred a broad discretion on the taxing officer to be exercised having regard to the facts of the case and the interests of justice. Referring at [7] and [8] to the reasons in Burford v Allan and in Chakravarti v Advertiser Newspapers Ltd, he said that that the issue was whether the proper exercise of the discretion required, in the circumstances, that interest be awarded from a date prior to judgment, or at least from the date of judgment.
He considered the law in other jurisdictions before examining in detail the discretion as to the time from which interest was to run at paragraphs [22] and following. He adhered to the views taken in Burford and Chakravarti that Parliament had conferred on the taxing officer a broad discretion to be exercised by reference to the relevant circumstances of the case, and it was a question of whether there were proper grounds to compute interest from a date earlier than the date of the certificate. A consistency of approach in the exercise was desirable, and the fact that the taxing officer exercised a broad discretion did not mean that there were no available principles or guidelines to assist the Court in exercising the discretion, referring at [24] to the observations of Mason CJ in Latoudis v Casey[18] dealing with the power of a court of summary jurisdiction to award costs in the exercise of its statutory discretion.
[18] (1990) 170 CLR 534 at 541.
The question (at [27]) was whether there was any relevant principle or guidelines that when applied to the facts required the taxing officer in the proper exercise of the discretion to make the order that the plaintiff sought, or alternatively if some error had been found in the approach taken in which case the exercise of the discretion should be reconsidered. Judgment had been awarded to the plaintiff on 7 August 1992 and the bill of costs was lodged for taxation on 15 March 1993, but by judgment made in May 1993 the Full Court had increased the award of damages and interest so the plaintiff had withdrawn the bill and sought orders for costs as between solicitor and client.
In August and November 1993, approximately $180,000 of the judgment money had been paid into the trust account of the solicitors for the plaintiff but nearly all this amount had been used to meet legal costs and disbursements. By order of 31 March 1994, after a further appeal to the Full Court, the trial Judge had ordered that the plaintiff recover costs against the defendant as between solicitor and client.
In May 1994, the plaintiff had lodged the bill for taxation on that basis. There followed a protracted taxation with interim allocaturs being awarded in October 1994 and August 1995, a payment of $100,000 made on account of costs in October 1994, and a further $280,000 in August 1995. The final allocatur was signed in December 1997, the question of interest being decided after that date with an order for interest being made on 4 September 1998. There was no suggestion that the plaintiff had made a payment to his solicitors on account of the substantial costs and disbursements until payments were made in August and November 1993 from the judgment monies. It followed that the plaintiff’s solicitors had carried unpaid substantial costs and disbursements for a considerable period. The plaintiff’s solicitors also received funds on account of costs from the defendant in October 1994 and August 1995.
In the end, the taxing officer had awarded interest in the sum of $18,530.09, taking the approach that by October 1994 the defendant should have paid to the plaintiff’s solicitors $250,000 on account of costs. The approach broadly taken was that the plaintiff had been kept out of that amount, subject to the payments made on account by the defendant from October 1994 to August 1995.
The award of interest was made based on an unjustifiable delay in making payments to the plaintiff on account of costs once the defendant was in a possession of a bill of costs in taxable form.
At [31], the Court discussed the purpose of an award of costs and an award of interest. Latoudis v Casey[19] made clear that in the realm of costs, criminal as well as civil proceedings, these were not awarded by way of punishment of the unsuccessful party, but rather were compensatory in the sense that they were awarded to indemnify the successful party against the expense to which he or she had been put by reasons of the legal proceedings, see also Cilli v Abbott,[20] but noting that in Oshlak v Richmond River Council,[21] Gaudron and Gummow JJ wrote at [89] that there was no absolute proposition that the sole purpose of a costs order was to compensate one party at the expense of another.
Doyle CJ wrote at [32] that it was pertinent to bear in mind that the function of an award of interest on damages prior to judgment had been seen to compensate a plaintiff for the loss or detriment which he or she had suffered by being kept out of his or her money during the relevant period, referring to MBP (SA) Pty Ltd v Gojic.[22] He proceeded on the basis that the purpose of an award of interest on costs was the same, that is, that interest was awarded to compensate the plaintiff for the fact that the plaintiff had been without the use of the plaintiff’s money, and concluded at [33]:
Once the amount of costs payable by the defendant to the plaintiff (in these reasons I refer only to costs being payable to a plaintiff simply as a matter of convenience) has been fixed by the certificate of the taxing officer, interest will be payable on that amount at the prescribed rate: section 114(2)(b). The obligation to pay interest thereafter does not depend on the plaintiff having already paid to his legal advisors the cost ordered to be paid, nor does it depend upon the plaintiff having agreed to pay interest on unpaid costs. The rationale underlying this provision is presumably, that once the certificate of the taxing officer is signed, the plaintiff is entitled to payment of the specified amount, and is entitled to interest by way of compensation for any delay in the making of that payment. No doubt Parliament assumed that interest received by the plaintiff would be passed on if the plaintiff had not yet paid the costs, but the entitlement of the plaintiff to interest does not depend upon that happening.
[22] (1991) 171 CLR 657 at 663.
Considering the exercise of the discretion, Doyle CJ observed at [35] that if a plaintiff had already paid legal costs or disbursements, there may be a sound basis for the exercise of the discretion to fix an earlier date from which interest is to run, explaining the position as follows:
If the plaintiff had already paid legal costs or disbursements, there may be a sound basis for the exercise of the discretion to fix an earlier date from which interest is to run. In that event the plaintiff will have met a cost for which the defendant is liable, and will have been out of pocket from the time of the payment until the costs are paid. Compensation to the plaintiff, and the giving of a partial indemnity, would require that an earlier date be fixed than the date of the taxing officer’s certificate In saying this, putting to one side the possibility of the existence of other relevant factors that might support a contrary decision, the same reasoning might apply if the plaintiff had not paid costs or disbursements but had agreed to pay interest on them if recovered from the defendant. An agreement to pay interest on unpaid costs raised issues that did not have to be considered in the present case. I am not to be taken as deciding such an agreement would be a reason for fixing an earlier date.
At [37], Doyle CJ highlighted that there appeared to be a strong case for an award of interest on the $180,000 paid to the plaintiff’s solicitors from the judgment monies in November 1993. In effect, the plaintiff was out of pocket to that extent from that date. The subsequent payments by the defendant in response to the interim allocaturs did not reduce the amount by which the plaintiff was out of pocket, because that amount was appropriately applied by the solicitors towards costs. It was not clear to the Court whether this point was ever brought to the attention of the taxing officer, but the material upon which it was based was before the Judge who heard the review of the taxing officer’s decision pursuant to r 101.21 of the 1987 Rules. It appeared to the Court that in this respect the exercise of the discretion had miscarried.
He continued at [40] that in his opinion it would not be proper to exercise the discretion by reference to the fact that the defendant had had the use of the money until it was paid over to the plaintiff. As he emphasised, the purpose of an award of costs was to compensate a plaintiff and not to make the defendant account for a gain made. The same applied to the award of interest. If proper compensation for the plaintiff did not require the payment of interest, the fact that the defendant had been able to earn interest on the money in the meantime did not justify the making of the order sought by the plaintiff.
At [41], he noted that the plaintiff had further submitted that he had been kept out of his money until it was paid to him by the defendant and that during that time it was available to the defendant and that the plaintiff was entitled to interest to compensate him for being kept out of his money. He called in aid remarks in some of the earlier cases justifying the incipitur rule rather than the allocatur rule including Newton v Grand Junction Railway Co,[23] and in Minister Administering the Environment, Planning and Assessment Act 1979 v Carson,[24] and Tarlinton v Hall.[25]
[23] (1846) 153 ER 1133 at 1134-1135.
[24] (1994) 35 NSWLR 342 (Young AJA).
[25] (1981) 38 ACTR 1 (Kelly J).
At [42], he acknowledged the force of this consideration and wrote that in a general sense it could be said to be fair that the plaintiff rather than the defendant should have the benefit of interest earned in the amount of costs ultimately held to be payable. But he continued:
But it seems to me that this argument of fairness is an argument for a general rule that the South Australian Parliament has chosen not to adopt. If this argument of the plaintiff were to be accepted, it would follow that in every case the defendant should be ordered to pay interest at least from the date of judgment regardless of whether the plaintiff had paid costs or agreed to pay interest. This would follow because the plaintiff’s proposition is simply that as a plaintiff is entitled to costs, and the defendant has had the use of the money after the entitlement arose, the defendant should as a matter of fairness pay interest if not reflecting the gain the defendant made, then at least reflecting the value to the plaintiff of having that money. But that is the very rule that the Parliament has not established, preferring to leave the matter to the discretion of the taxing officer. To adopt such a rule to guide that the exercise of the discretion would mean that, absent some disentitling conduct by the plaintiff, the defendant would always pay interest at least from the date of judgment. Such a rule also appears to me to depart from the principle that the award of costs, and the award of interest, is entitled to compensate the plaintiff for costs or expenses incurred by him. If the plaintiff has not paid the costs, or agreed to pay interest, an award of interest does more than compensate the plaintiff for a cost incurred, it provides the plaintiff with a potential windfall.
He continued at [47]:
While costs are paid by a losing party, they are not compensation for a wrong done. They are paid simply to compensate the plaintiff for costs incurred in making a successful claim. If the plaintiff does not pay costs until after the defendant has paid those costs to a plaintiff, a failure to award interest for the period prior to the taxing officer’s certificate does not leave the plaintiff out of pocket, or having suffered a loss giving rise to an entitlement for compensation which has not yet been received. Granted, once the defendant is ordered to pay costs, the plaintiff has an entitlement to costs yet to be quantified, but it is only if the plaintiff has already paid the costs or agreed to pay interest that the plaintiff can be said to have suffered a loss in the same sense as a tortiously injured plaintiff. A tortiously injured plaintiff can be said to be out of pocket from the time when the loss is suffered until damages are paid. A successful plaintiff who has not paid costs is not, in any sense, out of pocket while awaiting the receipt from the defendant of those costs. Even in the case of a tortiously injured plaintiff who suffers a need for services that are rendered voluntarily, the position is that such a plaintiff was, in the eye of the law, entitled to compensation for the need for those services once the need arose.
He continued at [58]:
In particular, I do not agree that ordinarily interest should run on costs ordered to be paid from the time when the work was done, or from the time when the plaintiff was charged for the work, or from the date of the judgment ordering that costs be paid, when the plaintiff has not paid the costs or agreed to pay interest on outstanding costs.
At [59], he dealt with the question of whether the plaintiff could and should have moved more quickly than he did to tax his costs. The bill was lodged in March 1993 and when the plaintiff succeeded on appeal in obtaining an order for costs as between solicitor and client, that bill was withdrawn and a bill as between solicitor and client was lodged for taxation. Bearing in mind the complexity of that bill, the Court held that no criticism could be made of the plaintiff based on delay. Although the taxing officer’s award of interest was made on the basis that the bill was filed after March 1994, in fact, the defendant had had in his possession a bill as between party and party since March 1993.
At [62], he observed that although no fault could be found in the taxing officer’s general approach to the question of interest, the exercise of the discretion had required reconsideration having regard to the fact that the plaintiff had paid some of the costs from his judgment moneys, and on the basis that the defendant had had fair notice of the costs claimed by the plaintiff about a year earlier than the taxing officer had realised. The appeal was accordingly allowed in order to enable the taxing officer to reconsider the question of interest in the light of these matters.
In concluding remarks were made at [63] and following, Doyle CJ wrote that in a case in which the plaintiff had not paid costs and had not agreed to pay interest on costs, the discretion under s 114(2)(b) in relation to the date from which interest ran was not to be exercised on the basis of a general principle that interest on costs and disbursements should run from the date of judgment awarding costs or from some earlier date at which the costs were earned, as to do so would not be a proper exercise of the discretion. The main reason for so concluding was that an order for costs was intended as a partial indemnity against expense incurred.
The taxing officer’s approach had been correct in principle, although the appeal was allowed to enable him to reconsider the question of interest in the light of the two matters identified.
At [65], Doyle CJ wrote that if the plaintiff had paid the costs wholly or in part the subject of the taxation, or had agreed to pay interest on them, this would be a circumstance which might justify an award of interest from judgment or even from an earlier date, subject to the reservation expressed earlier relating to an agreement to pay interest on unpaid costs.
At [66], he held that if the defendant had been found guilty of delay or of an unreasonable approach to the taxation of costs, then the taxing officer might well fix a date earlier than the date of the certificate from which interest was to run.
At [67], he was emphasised that it remained necessary to consider all relevant factors.
Finally, at [68], he wrote that s 114(2)(b) should confer a power on a taxing officer to award a lump sum by way of interest, in addition to the power to fix a date from which interest was to run. Observing that adjusting the date from which interest was to run would in many circumstances be a rather crude device. It was undesirable that the question of interest should give rise to lengthy argument about the selection of a date which would fairly compensate a plaintiff and the power to award a lump sum would inject some flexibility into the process which would avoid artificial arguments over the choice of a date.
In Malaugh Holdings (No 2) Pty Ltd & Anor v Seal & Anor (No 2),[26] Judge Smith reviewed a taxing Master’s decision reviewing his own provisional costs order. The action had been heard in the District Court, where the date from which interest on costs was to run was left entirely to the discretion of the taxing officer by virtue of s 40 of the District Court Act 1991 (SA), the District Court equivalent of s 114.
[26] [2011] SADC 37.
Judge Smith referred to the guidelines or principles assisting the exercise of the discretion in a matter of that type as canvased in the judgment of Doyle CJ in Osborne. He wrote at [66] and [69]-[72]:
It is rather obvious to say that to fully compensate and indemnify the plaintiffs the taxing officer’s order should not only require the unsuccessful defendants to repay those sums paid on account of costs, to the extent that they are allowed on taxation, but also to require the defendants to pay interest thereon from the dates of the payments.
Accordingly, the Master’s award of interest to the plaintiffs from the dates of the payments of costs was clearly justified. The question then arises whether there were any other relevant factors which might support a decision not to so backdate the calculation.
In Osborne it was made clear that it is appropriate for the taxing officer to also have regard to “disentitling conduct”. Doyle CJ at [66] said:
If the defendant has been guilty of delay, or of an unreasonable approach to the taxation of costs, the taxing officer might well fix a date earlier than the date of the certificate from which interest is to run. In such a case it is not easy to see how the date could be a date earlier than the judgment.
The converse must also be true, namely that any such disentitling conduct by the successful party could result in a reduction of the award of interest. The defendants contended that there was such conduct here, namely unwarranted delay and over claiming on the taxation. I have dealt with these matters. Suffice it to say, there was on the evidence no delay for which the plaintiffs were solely responsible and which could be characterised as such disentitling conduct, and the extent to which the plaintiffs were unsuccessful in the taxation, was adequately reflected by the Master in disallowed and reduced items. I say again that I agree with the Master as to these matters.
Judge Smith continued at [73]-[74]:
The defendants also contended that “the starting point is not for the award of interest ...” In that submission, counsel for the defendant Mr Tredrea relied upon that said by Chief Justice Doyle at [7] in Osborne. With respect, I disagree that there is any support for that proposition in [7] of Osborne or anywhere else in the judgment. At [7] the Chief Justice, inter alia, quoted his own judgment in Burford v Allan[1998] SASC 6693 where he said as follows “the starting point is not an award of interest from the date of judgment ...” It can be seen that counsel has inadvertently omitted the phrase “... from the date of judgment ...”
Indeed, as I have made clear … I consider that on the proper construction of s 40 the starting point is an award of interest. The successful litigant has a statutory entitlement to interest “at a rate prescribed by the rules” on the “judgment debt” which in my view includes costs ordered in his or her favour as eventually taxed. The discretion, embodied in s 40, operates only in respect of the running of the interest.
Players, relying on the affidavit of Mr Whitington, has submitted that the conduct of Clone in and about its endeavours to recover its costs on taxation, should be considered as disentitling conduct in assessing its interest entitlement. A relevant consideration to an award of interest was Players’ ability as the unsuccessful party to know what was being sought by Clone, and how to make a sensible offer was another, the latter being a highly relevant consideration. Players relied on its 6 February 2008 letter to Clone which referred to the need for proper notice of the costs claimed by Clone, the requirements of r 271(1)(a) of the 2006 Rules prior to the taxation, and Clone’s obligation to provide a response pursuant to sub-rule (4), which had been pointed out to it. It was clearly contemplated from this regime that a party liable for costs was to be given clear and sufficient notice of the costs claim to enable it to make an offer. The corollary was that if there was no sufficient compliance, this should affect the claimant’s entitlement to recover interest when the costs were ultimately fixed.
The affidavit evidence has established that between 10 November 2006, the date of the High Court’s refusal to grant special leave, and 17 April 2007 – a period of five months – Clone had failed to make any contact with Players as to its costs claim, and then following Clone’s application on 17 April 2007 seeking dispensation from its obligation to file a short form claim it was not until 23 November 2007 – a further seven-month period – that it had filed a short form claim. This had denied Players the opportunity to assess the adequacy and efficacy of Clone’s costs claim and to respond in a timely manner as was contemplated by the 2006 Rules. Players also failed for a time to respond to Clone’s request made on 21 December 2007 to inspect its files, and at the 25 January 2008 hearing before Judge Withers it had asserted that Players were no longer entitled to have Mr Cogan inspect their files because a response had been filed to the short form claim.
These submissions were rejected by Clone, which responded by saying that these events were confined to a one-year period (comprising less than five per cent of the overall time the matter had been afoot) between the failed High Court special leave application and Clone filing its short form claim. Although it had sought to dispense with the filing of a short form claim for its costs and to proceed straight to a long form claim had never been argued or substantively considered, rather it had been adjourned in April 2007 and again in February 2008. Players could not now assert that this period was a relevant “delay,” as there had been a series of mutual timetabling decisions regarding various interrelated matters when the matter more broadly was proceeding. Moreover, on 11 March 2008 Players had agreed that it was appropriate to proceed to a long form taxation, and that had proceeded. Clone submitted that any delay occasioned by the dispensation of the short form bill could only be relevant if Players could establish that this ultimately delayed the taxation, which it could not establish. Players’ application to set aside the Court’s judgment halted the taxation when it was nowhere near finishing. There was no evidence of prejudice or that Players could or would have acted differently were the matter to have proceeded through the short form process at an earlier time. Any suggestion that the taxation would have been shortened could be rejected for several reasons – despite Clone having agitated its costs entitlements throughout most of 2007, as at January 2008, Players had not inspected any documents supporting the short form claim, and when the claim was filed, it was objected to it in its totality, consistent with the history of the matter. When the long form bill was delivered there were very limited concessions and Players put most items in issue. When the taxation did resume in 2018, it took over seven years to complete.
Further, Clone submitted, the proceedings were ongoing after the High Court had dismissed Players’ application for special leave, so it was not a case where the matter was wholly concluded and there had been a material delay between that conclusion and the recovery of costs. The parties had consented to the adjournment of costs issues while the case was otherwise proceeding, and there was ongoing disruption to the work of Clone’s lawyers’ in marshalling the file for taxation purposes while other aspects of case were proceeding, and the file remained connected to the prosecution of the related issues.
Clone sought that the Court should reject the contention that there was relevant delay in the commencement of the taxation. It had taken many years to get to the position of Clone seeking interest on its costs, and the delay referred to by Players would not have sounded in a payment by it before the matter went to the High Court.
I have considered these submissions. It is clear from the evidence that there was a 12-month delay by Clone in the provision of its claim for costs. However, this is necessarily minor in the long history of these proceedings, and in the context of this present matter its effect was minimal. The delay occasioned could only be relevant if Players could establish that this delayed the taxation, which was not the case. Players set aside application halted the taxation when it was nowhere near finishing, and the proceedings continued for several years or more and the taxation did not resume until 2018.
The relevance of the costs offers regime to interest on costs
Players has advanced an argument relating to the importance of allowing to a paying party the opportunity to exercise their rights under the 2006 Rules to make costs offer after being properly informed as to the costs claim, and this being a relevant factor in the exercise of the discretion as to the award of interest on costs pursuant to s 114. The relevant rule provisions in this instance were rr 187 and 188 of the 2006 Rules. As far as I am aware, there is no published authority on this issue.
Rule 187 related to offers of settlement. Sub-rule 187(1) provided that a party may before the relevant date file an offer of settlement in the Court. Sub‑rule 187(2)(b) provided that the relevant date, if the offer related only to costs and was made in proceedings relating only to costs, was the date falling two days before the date appointed for the taxation. Rule 188 related to the consequences of filing an offer of settlement at court. Sub-rule (1)(a) provided that a party to whom a formal offer of settlement was made may before the relevant date accept the offer. Sub-rule (2) provided that if the offer related only to costs and was made in proceedings relating only to the taxation of costs, the relevant date was the date falling two clear business days before the date appointed for the taxation. Sub‑rule (8) provided that if a formal offer of settlement in proceedings relating only to the taxation upon costs was not accepted by the party to whom the offer was made and the Court determined the proceedings on terms that were no more favourable to that party than the terms of the offer, then subject to the Court’s order to the contrary, the costs of the taxation were to be borne on a solicitor/client basis by that party. What the rules were speaking of was a flexible period by the end of which an offer in relation to costs only might be made.
Clone had advised by letter dated 17 April 2007 that its costs claim was for $912,052.13. Its short form claim was served on 23 November 2007, and Players responded on 21 December 2007. After inspecting Clone’s files following the hearing before Judge Withers on 25 January 2008, on 20 February 2008 Players made offers to Clone. Clone submitted that by reason of the “split” nature of the assessment of interest that has been ordered, the relevant “end point” at which calculations are to stop will be 20 February 2008, being the date of the costs offers (at the earliest) and 30 November 2008 (namely the lapsing of the offers under the 2006 Rules) at the latest.
Players submitted that a fundamental proposition informing a resolution of Clone’s application was that cost offers were relevant to claims for interest on costs, and that the regime that allowed offers to be made in relation to costs necessarily informed the approach the Court should take to the undoubted discretion under s 114. It referred in this regard to Osborne where Doyle CJ, at [35], noted that he had put to one side the possibility of the existence of other factors that might support a contrary decision, such as the fact of payment of costs by a party to its solicitors as the matter progressed. Foots, Players said, had a bearing on the question of the interaction between the costs regime and the obligation to pay costs and therefore, the question of when interest would start to run. A party could not make an offer until it was bound by an order for costs and, further, until there had been some sensible quantification of what those costs might be. Were the position to be otherwise, they submitted, this would make a nonsense of the whole offer process, because until a party could avail itself of this process, it could not protect its position by making an offer to pay costs and potentially including interest up to that point.
Players emphasised the importance of the provision to a party which had to pay costs with the opportunity to exercise its rights under the 2006 Rules to make costs offer, and furthermore only once it had been properly informed. They submitted that the Court should determine under its 11 April 2025 order 1(a) that Clone’s entitlement to interest ran from no earlier than 20 February 2008 when Players’ offer was made, or if from an earlier date, this was to be 23 November 2007, when the short form claim was served. Were the position to be otherwise, this would make a nonsense of the whole offer process, because until a party could avail itself of that process, it could not protect its position by making an offer to pay costs, and potentially including interest, up to that point. If such offers were not relevant, it submitted, and the fact of an offer was to be ignored, then a party in Clone’s position could simply attend the taxation and say years after the event that as it has been awarded costs, and that it could now claim interest from an earlier date over the whole of the intervening period. This would render nugatory the whole costs offers regime.
In response, Clone submitted that these contentions were flawed and should not be countenanced. Costs offers were not at all relevant to interest, as distinct from the costs of the taxation. They were irrelevant to the determination of the date from which interest accrued, although Clone accepted that for present purposes the first of these points would need to await another date, if it was ever to be applied. Similarly, it submitted, the attempt to descend into a retrospective and granular examination of the lengthy and complex history of the matter by dissecting and isolating its discreet components, asserting that such matters had a bearing on Clone’s interest entitlement, was erroneous, particularly when doing so would involve a substantive examination of the merits of the applications, positions and tactical decisions adopted by the parties. Any assessment as to interest had to be assessed holistically and not in any form of segmented artificial manner.
In my view a relevant factor to consider in assessing Clone’s interest entitlement is that Clone wrote to Players in April 2007 providing a global claim for its costs but this was not particularised until 23 November 2007 when it served its short form claim to which Players responded on 21 December 2007. Players’ offers were served on 20 February 2008.
The costs offer regime is relevant to claims for interest on costs. It is a factor to which a taxing officer can have regard under to the unfettered discretion provided under s 114. In Osborne v Kelly, Doyle CJ at [35] noted the possibility of the existence of other factors which could be considered in the exercise of the discretion, and clearly offers are relevant to any claims for costs or otherwise. Although Foots should be regarded with care, as it related to the bankruptcy it gives some guidance to the interaction between the costs regime and the obligation to pay costs and therefore the question of when interest would start to run. As Players has submitted, a failure to have regard to the costs regime would make a nonsense of the whole offer process, because until a party could avail itself of the process, it could not protect its position by making an offer to pay costs and potentially including interest up to that stage.
I have noted Clone’s submission that cost offers are not relevant to interest, as distinct from the costs of the taxation. However, the role of a taxing officer to award interest on costs clearly establishes that an award of interest on costs is an incident to a taxation of costs, and the unfettered power of a taxing officer to award interest on costs is recognised in s 114.
I will accordingly have regard to Players’ submission on this issue in coming to a decision on the award of interest to Clone on its costs.
Players’ submissions as to the dates when Clone made payments to its solicitors
The calculation of interest awarded in cases where interest on costs was backdated to the dates when payments were made by the claiming party to its solicitors was discussed in Lahoud & Anor v Victor Lahoud & Ors.[32]
[32] (2006) NSWSC 126, Campbell J at [85].
Clone’s claim for interest is set out in Schedule 1 to its submissions and the amounts for solicitors fees, counsel fees and disbursements and their totals respectively are set out for two time periods, first 20 February 2008, when Players’ offers were made, and secondly 30 November 2008, being the relevant date for the acceptance of an offer for costs being two days before taxation as is referred to in r 188(2)(b) of the 2006 Rules – the date for taxation having been fixed as 2 December 2008.
Mr Whitington addressed the question of when most of the costs were incurred by Clone, and provided a Scenario (identified as C) which he said the Court should consider alongside Clone’s calculations appearing in its Schedule 1. Players’ Scenario C showed interest calculations from the date of the costs order to the date of service of Players’ offers of 20 February 2008. The solicitors’ fees allowed on taxation were $207,826.77 so based on the agreed approach to interest from 18 August 2005 to 20 February 2008, this would amount to $33,938.40 having regard to the fact that all the costs had been incurred by the date of Vanstone J’s costs order of 18 August 2005. However, Clone’s Schedule 1 showed that the equivalent interest claim was only $30,557.00. This was because Clone had obtained a lesser amount from Players in the taxation.
What this demonstrates is that a significant proportion of Clone’s actual payments appears to have been made after 18 August 2005. Players’ Scenario C calculation is dated from 18 August 2005. As a matter of logic, because Clone has calculated a lesser sum, it can be inferred that it could not have included in its calculation a significant number of charges prior to 18 August 2005. What follows is that most of the costs for which Clone made claim for solicitors’ fees, must have been incurred after 18 August 2005.
The same position applies relating to disbursements other than counsel fees. Clone’s Schedule 1 interest calculation on these disbursements is $14,832.00. Players’ Scenario C calculation, again calculated from 18 August 2005, is $16,000.00, again greater than Clone’s interest calculation. Once again, it is reasonable to infer that if Clone’s interest calculation commencing from 18 August 2005, is a lower figure than that of Players, as a matter of logic most of Clone’s costs under this head of claim must have been incurred after 18 August 2005. Mr Whitington acknowledged that the position did not apply in relation to counsel fees, as Players’ calculation was for $52,936, calculated from 18 August 2005, but Clone has a higher figure of $60,886 by reason of which it is reasonable to infer that some part at least of the counsel fees had been paid before 18 August 2005.
The point of Players’ submission is that great care had to be taken in assuming that there have been significant payments made by Clone before the date of the costs order of 18 August 2005. This is a matter of some complexity, and it should cause the Court to pause in going back beyond the date of Vanstone J’s order. Players submit that the matter is not as simple as Clone had contended. As Doyle CJ had made clear in Osborne, the fact of payment is only one relevant consideration. It follows that to award Clone interest on such payments as if they had all been made by the date of the costs order of 18 August 2005 would confer on Clone a windfall gain, at least in respect of the components representing solicitors' costs and non-counsel fee disbursements.
In assessing Clone’s interest entitlement, I will also have regard to these considerations. Clearly, the dates of payment by Clone to its solicitors should have a bearing on the award of interest which should be given to it, and the interrelationship between Clone’s claim set out in its Schedule 1 to the Scenario C provided by Players emphasises the need for caution to be taken by the Court in assuming that there had been significant payments made by Clone before the date of the costs order of 18 August 2005.
Calculation of costs as a lump sum
The parties did not address the issue of the calculation of interest as a lump sum in either their written or oral submissions. However, in Osborne v Kelly at [68], Doyle CJ wrote that s 114(2)(b) should confer a power on a taxing officer to award a lump sum by way of interest, in addition to the power to fix a date from which interest was to run, observing that adjusting the date from which interest was to run would be in many circumstances a rather crude device. It was undesirable that the question of interest should give rise to lengthy argument about the selection of a date which would fairly compensate a plaintiff, and the power to award a lump sum would inject some flexibility into the process which would avoid artificial arguments over the choice of a date.
I have determined that the use of a lump sum to assess Clone’s interest entitlement is clearly appropriate here. Multiple issues will have to be considered in this process. Clone itself has submitted two alternative calculations in its Schedule 1, one for interest to be calculated to 20 February 2008 (the date of Players’ costs offers) and 30 November 2008 (two days before the taxation). Players has evidenced some doubts as to dates of payment by Clone to its solicitors, they also rely on to a disentitlement issue by reason of the delay by Clone in the provision in its costs claim, and finally they invite the Court to have regard to the prejudice to them in providing costs offers until there has been completion of the costs offer regime.
The task of resolving all these considerations mathematically will as Doyle CJ observed in Osborne v Kelly constitute a rather crude device and it is undesirable that the question of interest should give rise to lengthy argument about the selection of an appropriate date.
I have regard to all these matters in combination in assessing Clones interest on its costs as a lump sum.
The calculation of Clone’s interest on costs claim
The orders made on 11 April 2025 providing a staged process for interest provide that the first stage will comprise a determination as to the point in time when Clone’s entitlement to interest is to commence to run and after that determination and based on the Courts answer, a calculation is to be made as to Clone’s actual interest on that cost entitlement calculated on the amounts allowed for solicitor’s charges, counsel fees and other disbursements up to and including the date of Players’ offers dated 20 February 2008 .
In the determination of interest on costs in this case, I have determined that the lump sum process should be utilised. As was observed by the Full Court in Osborne v Kelly, this is a permissible exercise especially having regard to the fact that adjusting the date from which interest is to run is in many circumstances a rather crude device, it is undesirable that the question of interest should give rise to lengthy argument about the selection of a date which would fairly compensate a plaintiff, and the power to award a lump sum injects flexibility into a process which will avoid artificial arguments over the choice of a date.
I take several factors into consideration in fixing the lump sum.
The first factor relates to the finding that it is appropriate that Clone should be awarded interest on its costs to be backdated to the times when it paid monies on account for solicitors’ charges, counsel fees and other disbursements. Although costs were awarded against Players in August 2005 the taxation was interrupted by Players set aside proceedings until they were ultimately dismissed by the High Court in 2018, and have only concluded recently. Clone has been waiting for its costs for approaching 20 years, it has paid costs on account to its solicitors, the compensatory nature of an award of interest on costs has been recognized in many authorities including the High Court, and there are many instances in the case law when interest awards are back dated to when a party made payments on account of its costs to its solicitors.
However, there are four other factors which I also consider are relevant to the unfettered discretion to award interest from an earlier time than the taxation certificate, and each of these needs to be considered.
The second factor within this stage of the interest calculation is the fixing of the date up until which interest is to be calculated. Clone proposes in Schedule 1 to its submissions two alternative dates. The first is that calculated to 30 November 2008, being the “relevant date” for the acceptance of Players’ offer for costs being two days before taxation as is referred to in sub-rule 188(2)(b) of the 2006 Rules. The calculation of interest on this basis is $142,032.01. The second is that calculated to 20 February 2008, being the date of Players’ offer for costs. The calculation of interest on this basis is $106,276.32. Clone urges the application of the first calculation, relying on sub-rule 188(2)(b) which provided that as a recipient of an offer under the then rules regime it had until two clear business days before the date appointed for the taxation namely 30 November 2008 to accept the offer, notwithstanding that Players had made the offer on 20 February 2008. However, Players have submitted that the Court should not read these provisions without context, because the purpose of the rule allowing an offer to be accepted within two clear business days before the date appointed for the taxation worked in conjunction with the provision in rule 187 which related to the final day upon which an offer for costs only might be made, and that rule should not be read as allowing, in effect, an unlimited time between the date of an offer and the taxation for a party (here a party in the position of Clone) to consider whether it should accept the offer.
There is merit in Players’ submission. Sub-rule 188(2)(b) as applied at the time properly interpreted in its context appears to be a kind of default cutoff date for reliance on the rules, rather allowing in effect an unlimited time to respond. At the same time, Clone should obviously be permitted a reasonable time in which to consider the offer and respond. The Court must in these circumstances decide a date upon which it will be appropriate to fix an interest cutoff date. In assessing this date, I have regard to the fact that Players’ costs offer was submitted to Clone on 20 February 2008, which was made before the long form bill was filed and only two months after the short form bill was served on them. In these circumstances, it would seem reasonable to factor into the interest calculation a period of two months after the date of the offer in which Clone could respond. It was then in a good position to know its own costs claim well and to be able to assess within such a period whether or not it should accept Players’ offer.
The third factor in this stage is whether the conduct of Clone in and about its delay in the submission of its costs claim to Players should be considered in diminishing its interest entitlement. It is clear from the evidence that notwithstanding that it was entitled to pursue its costs claim immediately following the refusal of the High Court to grant special leave to appeal against Vanstone J’s trial judgment on 10 November 2006, it did not serve its short form claim until 23 November 2007, just over a year later. In the normal case, such a delay might well be a factor in diminishing a cost applicants’ entitlement to interest, however this delay should be looked at in the context of the history of these proceedings. As Clone has submitted, any delay occasioned by the dispensation of the short form bill could only be relevant if Players could establish that this ultimately delayed the taxation, which was not the case. Players’ set aside application halted the taxation when it was nowhere near finishing, the proceedings continued for several years, and the taxation did not resume until 2018. Although there was delay, in the context of this matter the effect was minimal.
The fourth factor in this stage is the relevance of costs offers. This factor has been discussed earlier. I have formed the view that a relevant factor in the award of interest on costs is the importance of allowing to a paying party the opportunity to exercise their rights under the 2006 Rules to make costs offer after being properly informed as to the costs claim and its quantification, and this being a relevant factor in the exercise of the discretion as to the award of interest on costs pursuant to s 114. Were the position to be otherwise, this would make a nonsense of the whole offer process, because until a party could avail itself of this process, it could not protect its position by making an offer to pay costs and potentially including interest up to that point. Of difficulty, of course, is the quantification of such a factor This can only be determined, in my view, as one factor within a lump sum determination.
The fifth factor in this stage relates to the dates upon which Clone made payments to its solicitors. This is clearly relevant to the calculation of interest. Clone has formulated its calculations in Schedule 1 to its submissions, but as Players have argued, relying on Scenario C tabled by Mr Whitington, that at least in relation to payments for solicitors’ fees and non-counsel fee disbursements, a significant proportion of Clone’s actual payments must have been made after 18 August 2005, so the Court should look to some other and later starting point than that date, otherwise by awarding Clone interest on such payments this would confer on it a windfall gain, at least in respect of the components representing solicitors' costs and non-counsel fee disbursements. Once again, the quantification of such a factor in coming to a determination as to interest to be awarded is of difficulty, so again this only be determined, as a further factor within a lump sum determination.
I take all these factors into account. I remind myself that the task of resolving all these considerations mathematically will as Doyle CJ observed in Osborne v Kelly constitute a rather crude device.
Taking all these matters into account, I have determined to award to Clone the sum of $125,000 for interest on its costs up to and including the date of Players offers made on 20 February 2008.
In accordance with the orders made on 11 April 2025, a further hearing will be fixed to determine whether Players have relevantly beaten their offers, and if they have the consequences in relation to the period from the date of these offers until finalisation of the proceedings. If Clone seeks to challenge the validity of these offers, that exercise will also be undertaken in the second phase. Any further applications as to remaining interest issues can also be determined at that hearing.
I will direct the parties to contact the Court upon receipt of these reasons to advise whether they wish to have a date fixed for that hearing itself, which will then be fixed, or instead if a directions hearing is sought first, in which case a mention date will be provided.
Orders
The applicant is awarded the lump sum of $125,000 for interest on its costs up to and including the date of the respondents’ offers made on 20 February 2008.
A further hearing is to be fixed to determine whether the respondents have relevantly beaten their offers, and if so the consequences in relation to the period from the date of these offers until finalisation of the proceedings.
Any challenge to the validity of these offers and any further applications as to remaining interest issues will be heard at this hearing.
The parties are directed to contact the Court upon receipt of these reasons to advise whether they wish to have a date fixed for that hearing itself, which will then be fixed, or instead if a directions hearing is sought first, in which case a mention only date will be appointed.
- AGLC
- Clone Pty Ltd v Players Pty Ltd (No 14) [2025] SASC 109
- Case
- [2025] SASC 109
- Decision Date
CaseChat Overview and Summary
The court considered the statutory provisions governing interest on costs, as well as relevant case law from South Australia and other jurisdictions. The court noted that the original statutory provision only allowed for interest to be computed from the date of the certificate of the taxing officer. However, the provision was amended to grant the taxing officer a wider discretion. The court found that the amendment did not introduce a presumption in favour of computing interest from the date of the judgment, but rather required the court to be satisfied that there were proper grounds for doing so. The court also considered whether there were any countervailing factors that might preclude an earlier computation of interest, such as delay by the party ordered to pay costs or an unreasonable approach to the taxation of costs.
In the end, the court found that there were no proper grounds for computing interest from the date of the judgment. The court noted that Clone had delayed in making contact with Players regarding the costs issues, and that there was no evidence of any unreasonable approach to the taxation of costs by Players. The court held that interest should be computed from the date of the certificate of the taxing officer, as provided by the statutory provisions. The appeal was dismissed, and the orders of the primary judge were affirmed.
Orders
Orders of the court
Full text does not contain this section.
Background
Background to the litigation
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
Full text does not contain this section.