Paciocco v Australia and New Zealand Banking Group Limited (No 2)

The case of Paciocco v Australia and New Zealand Banking Group Limited (No 2) [2014] FCA 254, heard in the Federal Court of Australia, concerned a dispute between Lucio Robert Paciocco and Speedy Development Group Pty Ltd against Australia and New Zealand Banking Group Limited (ANZ). The substantive hearing had already been determined, and the present proceedings focused on the allocation of costs between the parties. The Applicants sought an order that the parties bear their own costs of the proceeding, with specific exceptions for certain expert costs and other specified expenses. Conversely, ANZ argued for a specific mathematical allocation of costs, where it would pay one-sixth of the Applicants' costs, and the Applicants would pay five-sixths of ANZ's costs, excluding certain expert costs.

The legal issues before the court were primarily concerned with the appropriate exercise of the court's discretion under section 43 of the Federal Court of Australia Act 1976 (Cth) to order costs. The principles guiding the court's discretion include that costs generally follow the event, the order is intended to compensate the successful party, and the exercise of discretion should be fair and consider the overarching purpose of promoting efficient litigation. The court considered the nature of the substantive claims, the conduct of the parties, and the overall balance of success and failure across the various issues.

In determining the appropriate costs order, the court noted that while there were specific successes and failures, the issues were not wholly severable and were inextricably linked. The court found that the proposed mathematical precision in the allocation of costs by both parties was artificial and not conducive to a fair outcome. The court also concluded that the Applicants' proposal to treat certain expert costs separately lacked a basis and would similarly be artificial. Ultimately, the court exercised its discretion to make no order as to costs, including reserved costs, finding that this result was fairer and best promoted the efficient conduct of litigation. The court's decision was evaluative, considering the substantive reasons, the context of the litigation, and the overall balanced nature of the outcome.