McClure v Lam (No.2)

The respondents, McClure and another, initiated proceedings against the appellant, Lam, in the Federal Circuit Court, seeking relief for breaches of the Competition and Consumer Act 2010. The respondents alleged that Lam, a director of a company, had engaged in misleading or deceptive conduct and unconscionable conduct, actions that the respondents claimed led to significant losses. The Federal Court was called upon to determine the allocation of costs in the interlocutory proceedings.

The primary legal issue before the court was whether it should make a costs order in the interlocutory proceedings, particularly considering the fact that no issue of principle was involved. The court needed to assess whether the circumstances justified a departure from the usual rule that each party bears their own costs in interlocutory matters. This consideration was crucial given the extensive nature of the proceedings and the significant resources expended by both parties.

In its reasoning, the court emphasised that while there was no issue of principle that warranted a costs order, the court recognised the exceptional circumstances of the case. Despite this, the court concluded that it was not appropriate to make a costs order against either party. The court noted that the proceedings were complex and had involved considerable legal and factual issues. However, the court ultimately decided that each party should bear their own costs for the interlocutory proceedings, reflecting the court's view that neither party's conduct warranted a costs penalty.

The court's decision highlighted the importance of proportionality in costs orders, particularly in interlocutory matters where no significant issue of principle was at stake. The outcome reinforced the general principle that parties should bear their own costs unless exceptional circumstances justified a departure from this norm.