Palmer v McGowan (No 6)

In Palmer v McGowan (No 6), the Federal Court of Australia dealt with a dispute between two parties, Mr Palmer and Mr McGowan, regarding costs associated with a cross-claim. The court was required to determine whether an appropriate award for costs should be made, considering the artificiality in assessing the success of the claim by reference to only economic considerations. The ultimate question was what is a just cost order in all the circumstances.

The court considered the motivations of Mr McGowan in commencing the Cross-Claim, noting that Mr Palmer initiated the litigation and the Cross-Claim was defensive. The court also observed that Mr McGowan took no steps prior to the institution of this proceeding to raise any issue with the publications upon which he now sues. Despite considering the Cross-Claim to be a suboptimal use of the Court's resources, it was Mr Palmer who first engaged the Court's processes. The court found that the commencement of the Cross-Claim in relation to plainly defamatory publications could not be stigmatised as being unreasonable. The court also took into account the fact that an offer of compromise was made.

The court concluded that the rejection of the offer led to an award of indemnity costs, as the result was more favourable to the person making the offer than the terms of the offer. The court ordered that the cross-respondent pay the cross-claimant’s costs of the Cross-Claim from 11am on 22 December 2021. The order for costs in favour of the cross-respondent was awarded in a lump sum pursuant to r 40.02(b) of the Federal Court Rules 2011 (Cth). The Registrar was directed to determine the quantum of the cross-respondent’s costs in such a manner as the Registrar deemed fit, including, if thought appropriate, on the papers.