McClure v Medibank Private Limited (No 2)

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FEDERAL COURT OF AUSTRALIA

McClure v Medibank Private Limited (No 2) [2025] FCA 343

File number: VID 64 of 2023
Judgment of: ROFE J
Date of judgment: 9 April 2025
Catchwords: COSTS – where applicants sought costs order in their favour and respondent sought apportionment of costs on an issue-by-issue basis – court’s discretion to award costs – relevant principles – consideration of relevant costs principles
Legislation: Federal Court of Australia Act 1976 (Cth)
Cases cited:

AWB Ltd v Cole (No 6) (2006) 235 ALR 307

Bailey v Beagle Management Pty Ltd (2001) 105 FCR 136

Barescape Pty Ltd v Bacchus Holdings Pty Ltd (No 12) [2012] NSWSC 1591

Boomerang Investments Pty Ltd v Padgett (Costs of Liability Phase) [2021] FCA 385

Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107

Idenix Pharmaceuticals LLC v Gilead Sciences Pty Ltd (No 2) [2018] FCAFC 7

Impiombato v BHP Group Limited (No 2) [2025] FCAFC 28

Les Laboratoires Servier v Apotex Pty Ltd (2016) 247 FCR 61

McClure v Medibank Private Limited [2025] FCA 167

N.V. Sumatra Tobacco Trading Company v British American Tobacco Services Ltd [2011] FCA 1295
Division: General Division
Registry: Victoria
National Practice Area: Commercial and Corporations
Sub-area: Regulator and Consumer Protection
Number of paragraphs: 24
Date of last submissions: 21 March 2025
Date of hearing: Determined on the papers
Counsel for the Applicants: W A Harris KC, S D Puttick, E Nadon
Solicitor for the Applicants: Baker McKenzie
Counsel for the Respondent: N P De Young KC, J J Rudd
Solicitor for the Respondent: King & Wood Mallesons

ORDERS

VID 64 of 2023
BETWEEN:

ZOE LEE MCCLURE

First Applicant

CIHAN SOLBUDAK

Second Applicant
AND:

MEDIBANK PRIVATE LIMITED (ACN 080 890 259)

Respondent

ORDER MADE BY:

ROFE J

DATE OF ORDER:

9 APRIL 2025

THE COURT ORDERS THAT:

1.The applicants’ interlocutory application dated 20 December 2023 in so far as it seeks the production of documents 1–14 listed in Annexure A to McClure v Medibank Private Limited [2025] FCA 167 be dismissed.

2.There be no order as to the costs of the interlocutory application dated 20 December 2023.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

ROFE J:

  1. On 7 March 2025, I delivered my reasons in McClure v Medibank Private Limited [2025] FCA 167 (Principal Judgment or PJ). On 17 March 2025, I ordered the parties to file submissions on the question of costs of the Applicants’ interlocutory application dated 20 December 2023 (Application), which was the subject of the Principal Judgment. This judgment adopts the abbreviations used in the Principal Judgment.

  2. The parties’ respective submissions as to costs are outlined below. For the reasons that follow, I am satisfied that each party should bear its own costs.

    1.                 Applicants’ submissions

  3. The Applicants submit that they should be awarded their costs of the Application.

  4. The Applicants stress that central to the substance and conduct of the Application was…

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Details
Case
[2025] FCA 343
Decision Date

CaseChat Overview and Summary

McClure v Medibank Private Limited (No 2) concerns a dispute regarding the costs associated with an interlocutory application related to the production of certain documents. The matter was heard by the Federal Court of Australia, where the primary focus was on determining whether privilege subsisted in the Deloitte Reports and the remaining Cyber Expert Documents. The Applicants argued that they should be awarded their costs due to their predominant success in the overall controversy, while Medibank proposed either an apportionment of costs or no order as to costs if the Court was not inclined to apportion them.

The legal issues before the Court included the principles governing the apportionment of costs in litigation and the exercise of the Court’s discretion under Section 43 of the Federal Court of Australia Act 1976 (Cth). The Applicants contended that the ordinary rule of costs following the event should apply, supported by case law such as Idenix Pharmaceuticals LLC v Gilead Sciences Pty Ltd and N.V. Sumatra Tobacco Trading Company v British American Tobacco Services Ltd. Medibank, on the other hand, argued that given both parties achieved substantial success, a mixed outcome warranted either an apportionment of costs or no order on costs.

The Court exercised its discretion to award costs by considering the substantial measure of success achieved by both parties. The Court recognised that while the Applicants had predominant success in the overall controversy, the focus on the Deloitte Reports meant that Medibank also achieved significant success. Additionally, the Court highlighted the potential expense and protracted nature of an issue-by-issue costs assessment, concluding that such an exercise would not be justified by its benefits. Therefore, the Court determined that there should be no order as to the costs of the interlocutory application, reflecting a balanced view of the overall outcomes for both parties.

Orders

Orders of the court

1. The applicants’ interlocutory application dated 20 December 2023 in so far as it seeks the production of documents 1–14 listed in Annexure A to McClure v Medibank Private Limited [2025] FCA 167 be dismissed.

2. There be no order as to the costs of the interlocutory application dated 20 December 2023.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

On 7 March 2025, I delivered my reasons in McClure v Medibank Private Limited [2025] FCA 167 (Principal Judgment or PJ). On 17 March 2025, I ordered the parties to file submissions on the question of costs of the Applicants’ interlocutory application dated 20 December 2023 (Application), which was the subject of the Principal Judgment. This judgment adopts the abbreviations used in the Principal Judgment. The parties’ respective submissions as to costs are outlined below. For the reasons that follow, I am satisfied that each party should bear its own costs.1. Applicants’ submissions The Applicants submit that they should be awarded their costs of the Application. The Applicants stress that central to the substance and conduct of the Application was whether privilege subsisted in the Deloitte Reports and that the privilege in the remaining Cyber Expert Documents were “peripheral” matters. The Applicants noted that the Court should not “cast undue analysis”, however directed the Court to the following facts. (1)Neither Mr Wilkins nor Mr Koczkar led any direct affidavit evidence on the other Cyber Experts. They were the only two witnesses required for cross-examination — cross-examination of Ms Ramsay and Mr Gatto having been “resisted” by Medibank. (2)Almost all the cross-examination in the hearing of the Application related to the Deloitte Reports. (3)The affidavit evidence of Mr Forbes, Ms Ramsay and Mr Gatto, which was read, also mostly concerned the Deloitte Reports. (4)The parties’ written submissions and their oral submissions developed at the hearing also principally related to the Deloitte Reports. In support of their position, the Applicants noted that the “ordinary rule is that costs follow the event, although a successful party may be awarded less than its costs, or costs may be apportioned, based upon success on the issues”: Idenix Pharmaceuticals LLC v Gilead Sciences Pty Ltd (No 2) [2018] FCAFC 7 at [3] (per Nicholas, Beach, and Burley JJ). The Applicants further cite N.V. Sumatra Tobacco Trading Company v British American Tobacco Services Ltd [2011] FCA 1295 at [17], where Greenwood J observed that:The question of apportionment ought to take account of the substance of the outcomes; whether a considerable part of the trial is taken up in determining issues upon which a party fails; whether the evidence relevant to the matters on which the party failed nevertheless overlapped with other issues in the controversy upon which the party was successful; whether it was reasonable to agitate the issue even though the party was unsuccessful; and, not cast undue analysis upon whether a successful party has been unsuccessful on “particular issues” in the context of its predominant success in the controversy overall… (Emphasis added.) As such, the Applicants submit that they should have their costs as they have had “predominant success in the controversy overall”. 2. Medibank’s submissions Medibank sought the following orders in relation to costs:(a)The respondent pay the applicants’ costs of and incidental to the application, as they relate to the documents 14, 15 and 17 in Part 1 of the affidavit of Melissa Monks affirmed 20 December 2023, being documents 15, 16 and 17 in Annexure A to the [Principal] Judgment.(b)The applicants pay the respondent’s costs of and incidental to the application, as they relate to the remaining documents the subject of the application.

Ratio Decidendi

Legal Principle Established

In the alternative, Medibank proposed the following position that, if the Court was not minded to make orders in the form proposed by Medibank, the appropriate order is that there be no order as to costs. To this end, taking a broad and overall view of the outcome, both parties achieved a substantial measure of success, particularly having regard to the Court’s consideration of the issues at [198]–[446] in the Principal Judgment. In support of this position, Medibank cited AWB Ltd v Cole (No 6) (2006) 235 ALR 307 at [16]–[17] (per Young J).3. Consideration Section 43 of the Federal Court of Australia Act 1976 (Cth) gives the Court a broad discretion in awarding costs. The discretion must be exercised judicially: Les Laboratoires Servier v Apotex Pty Ltd (2016) 247 FCR 61 at [305] (per Bennett, Besanko and Beach JJ). In Impiombato v BHP Group Limited (No 2) [2025] FCAFC 28, Beach and O’Bryan JJ noted the following at [13]:While not a rigid rule, usually the discretion to award costs is exercised in favour of a successful party: Oshlack v Richmond River Council (1998) 193 CLR 72 at [35] per Gaudron and Gummow JJ, [66]-[67] per McHugh J and [134] per Kirby J; Foots v Southern Cross Mine Management Pty Ltd (2007) 234 CLR 52 at [25] per Gleeson CJ, Gummow, Hayne and Crennan JJ; Sangare at [25]. A successful party may be deprived of a proportion of its costs, or even required to pay costs to the other party, if the successful party succeeded only upon a portion of its claim, or failed on issues that were not reasonably pursued, or where the result of the litigation might be described as mixed: Ruddock v Vadarlis(No 2) (2001) 115 FCR 229 at [11]ff; Queensland North Australia Pty Ltd v Takeovers Panel (No 2) (2015) 236 FCR 370 at [11]. However, the mere fact that a court does not accept all of a successful party’s arguments does not make it appropriate to apportion costs on an issue by issue basis: Australian Trade Commission v Disktravel [2000] FCA 62 at [3]-[4]; The State of Victoria v Sportsbet Pty Ltd (No 2) [2012] FCAFC 174 at [8]; Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) [2015] HCA 53; 327 ALR 192 at [6]… In exercising my discretion, I consider that the following factors are relevant. First, the Application sought the production of 17 documents, the Principal Judgment found that three of those documents were not privileged and hence should be produced. Therefore, both parties have had some measure of success in relation to the Application. Second, while only three of the 17 documents (being, the Deloitte Reports) were not found to be privileged, an overwhelming proportion of the evidence filed, cross-examination and written and oral submissions was directed to the three Deloitte Reports. Third, undertaking an issue-by-issue costs assessment can be an expensive and protracted exercise. I consider that any benefit from a costs assessment reflective of the parties’ success by reference to an issue-by-issue analysis would be far outweighed by the costs and time expended by the parties and the Court in achieving that result.