Murray v Lesicar

[2014] SASC 43

SUPREME COURT OF SOUTH AUSTRALIA

(Civil)

MURRAY & ORS v LESICAR & ORS

[2014] SASC 43

Judgment of The Honourable Justice Stanley

28 March 2014

PROCEDURE - COSTS - INTERLOCUTORY PROCEEDINGS

PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE - NATURE OF PROCEEDINGS - INCONCLUSIVE PROCEEDINGS

PROCEDURE - COSTS - GENERAL RULE - COSTS FOLLOW THE EVENT - COSTS OF ISSUES

Application for costs.

This is an application for costs of part of the proceedings only. 

The proceedings are yet to be finalised.  The parties seek an award of costs for part of the proceedings regardless of the final result of the action. 

The plaintiffs commenced proceedings against the defendants seeking a declaration as to the existence of a partnership, the date of its dissolution and for the taking of an account upon the determination of the partnership.

A Master of this Court referred the trial of the issue of whether a partnership existed to a Judge of this Court.  

Prior to the commencement of the trial, the parties filed extensive affidavits canvassing a range of issues extending beyond the question of the existence of a partnership.  A number of interlocutory hearings were heard before a Judge of this Court.  Certain issues were resolved between the parties.  Ultimately, the trial of the remaining live issue was vacated.  The parties agreed the basis upon which the matter could proceed for the taking of an account.  The matter is to be remitted to a Master of this Court for the purposes of taking the account and finally disposing of the action.

The parties seek an order for the costs of the proceedings to date.

Held: In the circumstances of this case, it would not be appropriate to make an award of costs in relation to part of the proceedings, which proceedings are yet to be finally determined (at [28] - [31]).

Supreme Court Civil Rules 2006 (SA) r 263, referred to.
Rasch Nominees Pty Ltd v Bartholomaeus [2013] SASCFC 105; Residential Property Conveyancers v Bagnato & Ors [2009] SASC 71, discussed.
Vergola Pty Ltd v Vergola Asia Pacific (2002) 217 LSJS 198; Cretazzo Lombardi (1975) 13 SASR 4; Oshlack v Richmond River Council (1998) 193 CLR 72; Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No. 2) [2008] FCAFC 107; Boscani Investments Pty Ltd v Corporation of the City of Kensington and Norwood [1999] SASC 327; Gribbles Pathology Pty Ltd v Health Insurance Commission (1997) 80 FCR 283; O'Keeffe Nominees Pty Ltd v BP Australia (1995) 55 FCR 591, considered.

WORDS AND PHRASES CONSIDERED/DEFINED

"event"

MURRAY & ORS v LESICAR & ORS
[2014] SASC 43

STANLEY J

Introduction

1. This is an application for costs. 

2. It is an application for costs of part of the proceedings only. 

3. The proceedings are yet to be finalised.  The parties seek an award of costs in any event.  That is to say an award of costs for part of the proceedings no matter what the final result of the action.[1]

   [1]    Vergola Pty Ltd v Vergola Asia Pacific (2002) 217 LSJS 198.

   The proceedings

4. The plaintiffs commenced proceedings against the defendants seeking a declaration as to the existence of a partnership, the date of its dissolution and for the taking of an account upon the termination of the partnership.

5. The dispute involved a firm of patent attorneys practicing in Melbourne and Adelaide, Lesicar Murray Trento (“LMT”).

6. Proceedings were issued after the first defendant asserted that there was no partnership and that the first defendant owned all the assets and the undertaking of LMT.

7. In the face of this assertion, the plaintiffs issued proceedings seeking declaratory relief, an account and further urgent interim orders including for the orderly continuation of the Adelaide and Melbourne practices pending the taking of an account.

8. When the matter first came before a Master of this Court, the Court indicated that it could accommodate an early trial of the issue of whether a partnership existed.  The parties were invited to negotiate holding orders pending the trial on that issue.  This led to orders being made by consent on 4 October 2013.  The trial of that issue was referred to me by the Master.

9. The Master conducted hearings on four occasions before the matter came before me. 

10. There were further hearings before me on 1 November 2013, 13 November 2013, 15 November 2013, 26 November 2013, 6 December 2013, 14 February 2014 and 11 March 2014. 

11. The parties filed extensive affidavits.  Those affidavits canvassed a range of factual issues.  Those factual issues extended beyond the question of the existence of a partnership.  That was formally conceded by the defendants on 24 October 2013 when the defendants’ solicitors served on the plaintiffs’ solicitors a draft statement of issues and contentions which conceded the existence of a partnership and the fact that it had terminated.   The statement of issues and contentions was served pursuant to orders made by the Master.  It was served on the plaintiffs’ solicitors in response to a draft statement of issues and contentions delivered on 11 October 2013.  By the time the defendants served their draft statement of issues and contentions the plaintiffs had filed five substantive affidavits in accordance with orders made by the Master.

12. The defendants complain that the plaintiffs’ draft statement of issues and contentions and the supporting affidavit material considerably expanded the issues in dispute beyond the question of whether a partnership had been brought into existence.  As I have noted, this was the issue that had been referred for trial before me. 

13. The defendants submit that the further issues raised by the plaintiffs were the date of termination of the partnership, whether the third plaintiff was an equity partner, whether the intellectual property in a software program called Patricoid was an asset of the partnership, and the conduct and credit of the first defendant. 

14. The plaintiffs submit that it was the defendants who put in issue the ownership of Patricoid, that the question of the date of the dissolution of the partnership and the equity interests in the partnership were issues that were dependent upon the primary question of whether a partnership existed, and that the facts raised on their affidavits relating to the conduct and credit of the first defendant are relevant to the account that the plaintiffs seek. 

15. The trial was listed to commence before me on 13 November 2013.  On 11 November 2013 the defendants filed six affidavits and their list of documents.  These were late.  On 12 November 2013 the plaintiffs put the defendants on notice that their late delivery of evidence and disclosure precluded the plaintiffs commencing the hearing on the following day.  There were further negotiations between the parties.  In consequence, the parties agreed the date of dissolution of the partnership and that Mr Trento was not an equity partner.    There was a hearing before me on 15 November 2013 where further holding orders were made and the matter was adjourned to 26 November 2013.  The plaintiffs applied to the Court to vary certain of the holding orders.   On 26 November the Court made directions to facilitate the trial of the remaining issue between the parties, namely, the ownership of Patricoid.  The trial was relisted to commence on 20 February 2014.    On 6 December 2013 the application by the plaintiffs to vary the orders made on 15 November 2013 came on for hearing before me.  The plaintiffs were largely unsuccessful on this application.  On 19 December 2013 the plaintiffs advised the defendants that they were prepared to concede the Patricoid issue.  They did so on the basis that the cost of pursuing the issue was not justified given the cost of obtaining an alternative system.  As a result, the trial before me was vacated.  The parties have agreed the basis upon which the matter could proceed for the taking of an account.  The matter is to be remitted to the Master for the purposes of taking the account and finally disposing of the action. 

16. That leaves the question of the costs of the proceedings to date.

    Costs application

17. The defendants initially sought an order for costs in the following terms:

    7.     As to the costs of the proceedings:

    7.1the costs of and incidental to applications made to and hearings before His Honour Judge Dart be reserved for disposition by Judge Dart namely:

    FDN 4 – Affidavit of Leon Trento filed 30/09/13

    FDN 5 – Interlocutory Application 27/09/13;

    FDN 6 – Affidavit of Leon Trento filed 02/10/13

    FDN 7 – Affidavit of Neil Murray filed 02/10/13

    Hearing on 03/10/13

    Hearing on 04/10/13

    Hearing on 10/10/13 (Order already made – costs in the cause)

    Hearing on 11/10/13 (Order already made – costs in the cause)

    7.2     the Plaintiffs bear the costs of and incidental to:

    FDN 9 – Affidavit of Alan James Foster filed 10/10/13

    Hearing on 11/10/13 before His Honour Judge Dart

    7.3the costs of and incidental to the Litigation of the issues as defined by the Statement of Issues and Contentions be the costs of the Defendants payable (jointly and severally) by the First, Second and Third Plaintiffs, the said costs to include the costs of and incidental to:

    7.3.1 the hearings before Justice Stanley on 1 November 2013, 13 November 2013, 15 November 2013, 21 November 2013, 26 November 2013 and 6 December 2013;

    7.3.2  the affidavits filed on behalf of the Plaintiffs namely:

    FDN 2 – Affidavit of Leon Trento filed 27/09/13

    FDN 3 – Affidavit of Neil Murray filed 26/09/13

    FDN 10 – Affidavit of Neil Murray filed 18/10/13

    FDN 11 – Affidavit of Leon Trento filed 18/10/13

    FDN 25 – Affidavit of Thomas Dewar filed 06/12/13

    7.3.3  the affidavits filed on behalf of the Defendants namely:

    FDN 15 – Affidavit of Timothy Ronald Andrews filed 11/11/13

    FDN 16 – Affidavit of Kate Elizabeth Maynard filed 11/11/13

    FDN 17 – Affidavit of Constantine Christos Karykis filed 11/11/13

    FDN 18 – Affidavit of Dr Drazen Lesicar filed 11/11/13

    FDN 19 – Affidavit of Amanda Wright filed 11/11/13

    FDN 21 – Affidavit of Michele Lee Duckworth filed 11/11/13

    FDN 23 – Affidavit of Dr Drazen Lesicar filed 14/11/13

    FDN 26 – Affidavit of Dr Drazen Lesicar filed 06/12/13

    7.3.4  the other documents filed on behalf of the Plaintiff namely:

    FDN 8 – Order (Injunction) filed by the Plaintiffs on 10/10/13

    FDN 13 – List of Documents filed by the Plaintiffs on 31/10/13

    FDN 14 – Statement of Issues and Contentions filed by the Plaintiffs on 06/11/13

    FDN 22 – Order (Injunction) filed by the Plaintiffs on 14/11/13

    FDN 28 – Supplementary List of Documents filed by the Plaintiffs on 20/12/13

    7.3.5  the other documents filed on behalf of the Defendants namely;

    FDN 12 – Notice of Acting by the Defendants’ Solicitor filed 22/10/13

    FDN 20 – List of Documents by the Defendants filed 11/11/13

    FDN 24 – Supplementary List of Documents filed by the Defendants on 04/12/13

    FDN 27 – Supplementary List of Documents by the Defendants filed 11/11/13

18. In the course of submissions, however, they submitted that the appropriate order for costs should be:

    1. The plaintiffs have their costs from 27 September 2013 (including of the summons FDN 1 and the affidavits FDN 2 and FDN 3), incurred up until 24 October 2013 in connection with the issue of whether LMT was a partnership, but no costs in connection with the other issues, namely, when did the partnership dissolve, was Mr Trento an equity partner, who owned Patricoid, and the conduct and credit of the first defendant;

    2.The defendants have their costs from 27 September 2013 in connection with the issues referred to in the preceding paragraph but not costs in connection with the issue of whether a partnership existed. 

19. The basis of the defendant’s application for costs is that by reason of the concessions made by the plaintiffs, they have succeeded on all but one of the issues that were before me for trial.  As costs should follows these “events”, the orders they seek in relation to costs should be made. 

20. The plaintiffs submit that the following orders should be made in relation to costs: 

    1.That the plaintiffs have 80 per cent of their costs of the action between 5 October 2013 and 11 March 2013 on a party/party basis, except for the costs referred to below;

    2.That the costs of and incidental to the hearings on 3, 4 and 10 October 2013 (presently reserved by the Master) be determined by the Master in his discretion;

    3.That the defendants have 80 per cent of their costs of and incidental to the plaintiffs’ application heard on 6 December 2013 on a party/party basis;

    4.That save and except for the above orders, there is no order as to costs for the period 5 October 2013 to 11 March 2014. 

21. The basis of the plaintiffs’ submission is that the proceedings instituted by them were precipitated by the defendants’ contention that there was no LMT partnership, that the first defendant owned all the assets and undertaking of the partnership, and the first defendant’s unilateral severance of the Melbourne office from the electronic file base of the partnership which threatened the ongoing viability of the severed Melbourne practice.  They submit that they acted reasonably in bringing these proceedings and that the evidentiary material put before me is relevant to the account which is still to be taken by the Master.  They concede that the defendants are entitled to 80 per cent of their costs for the argument of 6 December 2013 on the basis that, while the plaintiffs were largely unsuccessful, some of that hearing was devoted to procedural orders, the further hearing of the trial and they obtained some variations to the orders made on 15 November 2013.  The plaintiffs submit that there has been no hearing on the merits of any issue.  In that sense there is no “event”.  However, the plaintiffs submit they were compelled to bring the proceedings in the circumstances outlined.  Absent the question of whether or not there was a partnership in existence, and if so, when it commenced and when it terminated, the parties would have been able to proceed to take an account and the time and expense that has been consumed in these matters would not have been wasted. 

    Relevant principles

22. The Court has an absolute and unfettered discretion as to costs, subject only to the requirement that the discretion be exercised judicially, not arbitrarily or capriciously, and that it cannot be exercised on grounds unconnected with the litigation.[2] The usual rule is that costs follow the event. A declaratory statement of this position is found in 6SCR 263(1). This was explained by me in Rasch Nominees Pty Ltd v Bartholomaeus:[3]

    [2]    Cretazzo v Lombardi (1975) 13 SASR 4 per Bray CJ at 11.

    [3] [2013] SASCFC 105 at [57] – [60].

    6SCR 263(1) provides that as a general rule, costs follow the event. It then prescribes exceptions to the general rule. In Copping v ANZ McCaughan Ltd[4] King CJ rejected an argument that r 101.02 of the 1987 Supreme Court Rules, the predecessor to 6SCR 263, fettered the operation of s 40. King CJ, with whom Mohr and Nyland JJ agreed, said of s 40:[5]

    [4] [1995] SASC 4917, (1995) 63 SASR 523 at 527.

    [5] [1995] SASC 4917, (1995) 63 SASR 523 at 527.

    … the legislative intention is plainly to confer on courts and judges an unfettered discretion as to costs.  A construction of a rule of court which practically negates the statutory provision is not lightly to be adopted. 

    The Chief Justice went on to contemplate that a rule which purported to limit the Court’s unfettered discretion as to costs might be invalid as it would be repugnant to s 40. In my view, 6SCR 263 should not be construed so as to limit the court’s unfettered discretion as to costs conferred by s 40. 6SCR 263 is to be construed as identifying the general approach to awarding costs and identifying specific exceptions to the general approach, but it is not to be construed as defining the exceptions to the general rule exhaustively.[6]  In this context, I note the judgment of Perry J in Settlement Wine Co Pty Ltd v National and General Insurance Co Ltd (No. 3)[7] where his Honour held that because s 40(1) is expressed to be subject, inter alia, to the Rules of Court, this means that the breadth of the discretion conferred by s 40 is confined to that defined by the rules.  Curiously, Perry J did not refer to the Full Court’s judgment in Copping.  In any event, I am satisfied that the approach of Perry J can be reconciled with the Full Court’s judgment in Copping on the basis that I have explained.  

    In Advance Resource Services v Charlton,[8] Doyle CJ considered the principles relevant to the exercise of a statutory costs provision such as s 40 in the light of the High Court’s judgment in Oshlack v Richmond River Council[9]  He said:

    In relation to statutory provisions that confer on a court a general discretion as to costs, certain general principles have emerged. One is that the discretion should be exercised judicially, not by reference to irrelevant or extraneous considerations, but upon facts connected with or leading up to the litigation: see Gaudron and Gummow JJ in Oshlack (at [34]). Another general principle is that ordinarily a wholly successful defendant will receive that defendant’s costs unless there is a good reason to order otherwise: see Gaudron and Gummow JJ in Oshlack (at [35]). However, it needs to be emphasised that these are but general principles, and should not be treated as if they are rules of law.

    Another well recognised principle was identified by McHugh J in Oshlack. Although his was a dissenting judgment, the principle to which he referred is well established: see Latoudis v Casey (1990) 170 CLR 534 and Ohn v Walton (1995) 36 NSWLR 77 at 79. The principle is that the purpose of an order for costs is to indemnify or compensate the person in whose favour it is made, not to punish the person against whom it is made: Oshlack (at [82]).

    Although guiding rules of principle and practice have developed,[10] the discretion remains unfettered and each case must be decided on its own facts.

    [6]    Gwinnett v Day (No. 2) [2012] SASC 61 at [12] – [14].

    [7] [1997] SASC 6041 at [22], (1997) 190 LSJS 101 at 105.

    [8] [2008] SASC 118 at [10] – [11], (2008) 100 SASR 388 at 391.

    [9] [1998] HCA 11, (1998) 193 CLR 72.

    [10]   Stubing and Anor v Halling and Anor [2012] SASCFC 123 at [28], (2012) 115 SASR 1 at 7 – 8, per Gray J.

23. Gray and Sulan JJ agreed with these reasons.  

24. By far the most important factor which courts have viewed as guiding the exercise of the costs discretion is the result of the litigation.  A successful litigant is generally entitled to an award of costs.[11] 

    [11]   Oshlack v Richmond River Council [1998] HCA 11 at [66], (1998) 193 CLR 72 at 96.

25. While the usual rule is that costs follow the event, courts do not usually make costs orders on an issue by issue basis, rather the relevant “event” is the ultimate judgment of the court.[12]  Of course, the usual practice cannot circumscribe the court’s unfettered discretion which is to be exercised by reference to the facts and circumstances of each case.[13] 

    [12]   Cretazzo v Lombardi (1975) 13 SASR 4 per Jacobs J at 16.

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

26. While the court’s discretion as to costs is unfettered, subject to the requirement that the discretion be exercised judicially, it will rarely, if ever, be appropriate, where there has been no trial on the merits, for the court to determine costs on any basis other than that each party should bear its own costs.[14]  That is because the relevant event has not occurred.  Accordingly, to make any other orders in respect to costs would require some prediction of the outcome of the case. 

    [14]   Gribbles Pathology Pty Ltd v Health Insurance Commission (1997) 80 FCR 283 followed in Boscaini Investments Pty Ltd & Ors v Corporation of the City of Kensington and Norwood [1999] SASC 327 at [21].

1. In Residential Property Conveyancers v Bagnato & Ors[15] Layton J considered the principles to be applied to the question of costs when an action has been discontinued.  She said:[16]

   [15] [2009] SASC 71.

   [16]   Residential Property Conveyancers v Bagnato & Ors [2009] SASC 71 at [19] – [25].

   In Pentroth Pty Ltd v Kirschild Pty Ltd,[17] White J considered r 52.03 of the Supreme Court Rules 1987, which provided that a discontinuing party was to bear the costs of the proceedings unless the court ordered otherwise. His Honour found that this did not create a presumptive entitlement for costs against the discontinuing party and adopted the approach suggested by McHugh J in Re The Minister for Immigration and Ethnic Affairs; ex parte Lai Qin[18] (“Lai Qin”), in which McHugh J stated:[19]

   [17] [2006] SASC 356.

   [18] (1997) 186 CLR 622.

   [19]   Re The Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622, 624-5 as cited in Pentroth Pty Ltd v Kirschild Pty Ltd [2006] SASC 356, [34].

   “In some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. …

   If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings.  This approach has been adopted in a large number of cases.  [Citations omitted]”

   In applying this approach, White J commented:[20]

   [20]   Pentroth Pty Ltd v Kirschild [2006] SASC 356, [35].

   This approach suggests that the court should not, in effect, try an action simply for the purposes of determining an appropriate outcome for costs.  There may be cases in which the court considers that a party’s conduct in commencing the litigation, or in continuing it, was unreasonable or in which it can, conveniently, form a view as to the probable outcome.  In such cases, an order that the discontinuing party pay costs may be appropriate.  Much may depend on any explanation provided to the court for the discontinuance, as well as the circumstances surrounding its commencement and continuance generally.  However, when the court is satisfied that the conduct of the parties has been reasonable, it will usually be appropriate for the court to make no order as to costs.

   Therefore, the fact that a discontinuance is filed does not of itself determine whether the discontinuing party should pay the costs of the person against whom the action is discontinued.  It is still necessary to consider whether the party has acted reasonably in commencing and continuing the action.

   In Boscaini Investments Pty Ltd & Ors v The Corporation of the City of Kensington and Norwood,[21] Debelle J referred to Australian Securities Commission v Aust-Home Investments Ltd,[22] in which Hill J extracted the following principles from the relevant authorities:[23]

   [21] [1999] SASC 327.

   [22] (1993) 116 ALR 523.

   [23]   Australian Securities Commission v Aust-Home Investments Ltd (1993) 116 ALR 523, 530 as cited in Boscaini Investments Pty Ltd & Ors v The Corporation of the City of Kensington and Norwood [1999] SASC 327, [21].

   “(1)    Where neither party desires to proceed with litigation the court should be ready to facilitate the conclusion of the proceedings by making a cost order.

   (2)     It will rarely, if ever, be appropriate, where there has been no trial on the merits, for a court determining how the costs of the proceeding should be borne to endeavour to determine for itself the case on the merits or, as it might be put, to determine the outcome of a hypothetical trial. This will particularly be the case where a trial on the merits would involve complex factual matters where credit could be an issue.

   (3)     In determining the question of costs it would be appropriate, however, for the court to determine whether the applicant acted reasonably in commencing the proceedings and whether the respondent acted reasonably in defending them (SEQEB).

   (4)     In a particular case it might be appropriate for the court in its discretion to consider the conduct of a respondent prior to the commencement of the proceedings where such conduct may have precipitated the litigation.

   (5)     Where the proceedings terminate after interlocutory relief has been granted, the court may take into account the fact that that interlocutory relief has been granted. [Citations omitted]

   Debelle J cited other authorities which followed these propositions, and agreed with the following comments made by Finkelstein J in Gribbles Pathology Pty Ltd v Health Insurance Commission:[24]

   “For my own part I should wish to emphasise that in the absence of a hearing on the merits it is difficult to see how any order, other than an order that each party bear its own costs, can be made except in special circumstances.  To do otherwise would require some prediction of the outcome of the case.  It seems to me that the third proposition stated by Hill J was intended to cover the situation where the Court was in fact able to form a clear view about the merits of a case without a trial.  So, if a claim is patently hopeless that would be a good reason to make an order for costs against the claimant.  Likewise if a defence was bound to fail that would be good reason for awarding costs in favour of the claimant.  But I venture to suggest that there will be very few cases where the issues will be sufficiently clear, in the absence of a hearing, for an order for costs to be made in favour of a party.”

   Debelle J agreed that the third proposition enunciated by Hill J was of limited assistance, as the reasonableness of the conduct of the parties is not likely to assist in determining whether an applicant should recover their costs. In the view of Debelle J, “the real question is whether the applicant had reasonable prospects of success.”[25]  However, his Honour acknowledged a party who does not act reasonably may be disentitled to costs.  His Honour therefore suggested the third proposition should be varied as follows:[26]

   Depending on circumstances, where the applicant has acted reasonably in commencing proceedings, has an arguable case, and it is reasonable to conclude that the respondent has acted in consequence of the commencement of proceedings, the court may be prepared to make an order as to costs in favour of the applicant.

   In concluding that is was not possible to determine the likely prospects of success of the application before him, Debelle J referred to issues concerning the credit of witnesses and the contents of complex documentation.  His Honour concluded that, “to make any order as to costs would be to presume the outcome.  It is not possible, therefore, to make any order as to costs”.[27]

   [24]   Gribbles Pathology Pty Ltd v Health Insurance Commission (1997) 80 FCR 284, 287 as cited in Boscaini Investments Pty Ltd & Ors v The Corporation of the City of Kensington and Norwood [1999] SASC 327, [21].

   [25]   Boscaini Investments Pty Ltd & Ors v The Corporation of the City of Kensington and Norwood [1999] SASC 327, [22].

   [26] Ibid.

   [27] Ibid.

   Consideration

2. This is not a case where an application for costs has been made following the discontinuance of the action.  On the contrary, the action is still on foot.  Nonetheless, the principles applicable to the determination of costs in circumstances where proceedings have been discontinued are relevant to the circumstances of this matter.   There has not been a hearing on the merits.  Both parties have made concessions that rendered it unnecessary for me to conduct the trial on the question referred to me by the Master.   I do not consider that in this matter I should award costs on the basis that one party has conceded an issue, particularly where that occurs for pragmatic reasons in the context of the litigation.  The Court should be slow to create a situation in litigation where parties are discouraged from conceding points for practical reasons because of the risk of suffering in costs as a result.  In my view, if I was to decide the question of costs at this time, it would not be appropriate in this case to determine costs on any basis other than that each party bears its own costs.  However I do not consider that I should make an award of costs at this time in the particular circumstances of this case. 

3. Given that there has been no hearing on the merits, the difficulty of deciding costs at this time and in these circumstances is reflected in the terms of the parties’ respective applications for costs orders.  The defendants seek orders in relation to particular issues as they characterise them while the plaintiffs seek costs on the basis of a combination of the costs of the action for a defined period of time, the costs of particular hearings during that time and the cost of a particular application.  Either approach, but particularly the defendants, would present difficulties on taxation in deciding whether any particular costs item was connected to a particular issue or the extent to which it was connected to a particular issue.  For example, affidavits filed in this matter address a number of the issues identified by the defendants, on only some of which the defendants claim to have been successful.  On the other hand, the plaintiffs contend for an arithmetical apportionment of costs predicated on considerations of the reasonableness of their conduct.  That approach presents its own difficulties where there has been no trial on the issue which would inform a judgment as to what sort of arithmetical apportionment fairness would dictate.  These are not uncommon problems where a court descends into the exercise of awarding costs on an issue by issue basis. That perhaps explains why awards of costs on an issue by issue basis have only been made in limited cases and exceptional circumstances.[28]   While the problems are not necessarily insurmountable, they are problems that do not arise where costs are awarded on a broad axe or global basis, which is the usual practice once the action has been finally decided.  This is not a case, as frequently occurs, where a court makes an order for costs in relation to a discrete interlocutory application where costs can be awarded on the basis of who was successful on the determination of that application.  In this matter, the Court is asked to make an award of costs in any event, in relation to part of the proceedings, which proceedings are yet to be decided.

   [28]   Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No. 2) [2008] FCAFC 107 at [3].

4. I am not prepared to do so.  

5. The matter is to be remitted to the Master for the taking of an account and the ultimate disposition of the action.  In the usual course, that could constitute the relevant “event”.[29]  But that will be a matter for the Master.  In my view, however, the question of the costs of this part of the proceedings, that I have dealt with, should be reserved to the Master for him to decide after a trial on the merits.  To the extent that the Master will need to consider how to treat that part of the proceedings he did not hear in deciding the question of costs, hopefully he will be assisted by these reasons. 

   [29]   O’Keeffe Nominees v BP Australia (1995) 55 FCR 591 at 598 – 599.

   Conclusion

6. I would reserve the question of the costs of the part of the proceedings heard by me to the Master.