EIFY Systems Pty Ltd v 3D Safety Services Pty Ltd (No. 2)

EIFY Systems Pty Ltd sought to recover damages from 3D Safety Services Pty Ltd for alleged breaches of contract. The Federal Circuit and Family Court of Australia was tasked with resolving the dispute and determining the costs associated with the litigation. The central legal issues revolved around the allocation of costs, particularly given the plaintiff's inefficient conduct throughout the proceedings and the defendants' success on the substantive claims.

The court first addressed the plaintiff's conduct, which it found to be entirely inefficient and disorganised. This conduct was so derelict that it warranted the exercise of the court's discretion to order costs on an indemnity basis. The court considered the plaintiff's approach to costs, which included attempts to pay only a fraction of the defendants' costs. Given the plaintiff's conduct, the court determined that it was appropriate to order costs on an indemnity basis. Additionally, the plaintiff's application for a gross sum costs order was considered in lieu of indemnity costs. The court found that the costs of assessment were disproportionately high and that the plaintiff had demonstrated a propensity to challenge prior costs assessments extensively. The court also noted that there would be no detriment to the plaintiff due to the mathematical relation between the gross sum sought and the amount likely to be assessed. Consequently, the application for the gross sum costs order was granted. The court then examined whether the principal of the corporate plaintiff should be made jointly and severally liable for the costs, given that the principal directed the litigation and stood to gain from it. However, the court found insufficient reason to pierce the corporate veil, and the application was dismissed.

The final orders of the court included an indemnity costs order against the plaintiff and a gross sum costs order, while the application for third-party costs was dismissed. The plaintiff was required to pay the defendants' costs on an indemnity basis and to comply with the gross sum costs order. The court's decision emphasised the importance of efficient and organised litigation conduct and the consequences of failing to meet these standards.