Taxation of costs of Interlocutory applications (R 63.20.1)
The Supreme Court Rules have been amended to bring the Court into line with the Federal Court and
NSW Supreme Courts, whereby costs awarded in interlocutory application or hearing cannot be taxed
until the conclusion of the proceeding unless the Court otherwise orders. Therefore, when seeking an
award of interlocutory costs, consideration needs to be given as to whether an order should be sought
for interlocutory cost to be taxed forthwith.
Besanko J considered the purpose of the equivalent Federal Court Rule:
“The general rule serves a number of purposes. First, it avoids multiple taxations in a proceeding.
Secondly, it avoids the apparent unfairness which may arise where, at an early stage of a
proceeding, a party who is ultimately successful is required to pay costs to a party who is ultimately
unsuccessful. Finally, it prevents interlocutory proceedings being used as a weapon to exhaust the
financial resources of one of the parties.”1
The circumstances in which an order should be made that the cost be taxed forthwith were considered
in Dale V Clayton Utz (No 3)2, Hollingsworth J review the policy reasons behind the rule as:
“(a) Avoiding multiple taxations, and the attendant costs;
(b) Avoiding interlocutory applications being used as a means to exhaust the funds of an opposing party;
(c) Avoiding unfairness in a case where, for example, a party who is ultimately successful is unable to
set off their judgment against an earlier liability to pay costs.”
The cases on the equivalent Federal Court Rule establish the principle that
“[t]he discretion which is vested in the Court to order that a party’s costs be taxed and paid
forthwith should be exercised only where the interests of justice in the particular case require that
there be a departure from the general practice”3.
In Dale, Hollingsworth J noted three broad reasons for exercising discretion to order immediate taxation
of interlocutory costs:
Rafferty v Time 2000 West Pty Ltd (ACN 127 893 270) (No 3) [2009] FCA 727; (2009) 257 ALR 503, Young v Wyllie (No
2) [2010] FCA 616
[2013] VSC 593
McKellar v Container Terminal Management Services Ltd [1999] FCA 1639
“(a) Because of the conduct of the unsuccessful party;
(b) Because of the likely delay before the final completion of the proceeding; and
(c) Because the interlocutory application involves a separate or discrete issue.”
Her Honour further considered the third ground, noting this could involve both a self-contained part of
the proceeding, a discrete aspect of the case, or a discrete part of the case.
Circumstances in which orders have been made that interlocutory costs be taxed forthwith include:
where the final determination of a proceeding was "far away"4
long delay in close of pleadings by the pursuit of an ill-considered and perhaps unnecessary
where a party has been required to incur significant costs over and above those which it
would have incurred had the opposing party acted in the handling of the proceeding with
competence and diligence6
Substantial amendments to the statement of claim7
Where the proceeding involves the resolution of a discrete issue8.
Sometimes it is necessary to consider the nature of the cost order, and whether it is interlocutory in
nature. An example is Australian Mud Company Pty Ltd v Coretell Pty Ltd (No 4)9. In that matter there
was a split trial. The respondent succeeded and was granted most of its costs of the trial on liability.
When it sought to file its bill of costs in respect of the liability trial, the applicant took issue that the cost
order was interlocutory in nature and the costs could not be taxed until the conclusion of the whole
proceedings. Barker J expressed the view that the cost order was not interlocutory in nature, but
expressed a preliminary view that it was not. However, he chose to exercise his discretion to order that
the costs be taxed forthwith.
Allstate Life Insurance Co v Australia & New Zealand Banking Group Limited (No 13) (Full Federal Court, 17 August 1995,
Harris v Cigna Insurance Australia Ltd (1995) ATPR 41-445
Life Airbag Company of Australia Pty Ltd v Life Airbag Company (New Zealand) Ltd (unreported, 22 May 1998)
Batten v CTMS Ltd [1999] FCA 1576; Vasyli v AOL International Pty Ltd & Anor (unreported, 2 September 1996)
Australian Flight Test Services Pty Ltd v Minister for Industry, Science and Technology (unreported, Federal Court of
Australia, O’Loughlin J, 26 April 1996)
[2013] FCA 567