Costs – maximum costs order under rule 40.51

In Houston v State of New South Wales [2020] FCA 502 (17 April 2020) the court dismissed an interlocutory application seeking a maximum costs order under r40.51 of the Federal Court Rules 2011 (Cth).

Rule 40.51(1) provides: “A party may apply to the Court for an order specifying the maximum costs as between party and party that may be recovered for the proceeding.” The applicant sought an order that the maximum party and party costs which the applicant and respondent could recover from the other is nil.

The relevant principles guiding the exercise of the court’s discretion under r40.51 were not in dispute (at [17]). Griffiths J said at [19]: “It has been acknowledged in various cases relating to r40.51 that the principal purpose of the provision (and its predecessor, order 62A) was not so much a desire to limit the exposure of a respondent to an adverse costs order in complex and lengthy commercial litigation, but rather with concerns as to access to justice, public interest, and a desire to limit the costs of all parties, particularly in less complex and shorter cases…”

In dismissing the application, the court discussed the concept and relevance of whether the litigation was in the public interest (at [22]-[30]).

Dan Star QC is a Senior Counsel at the Victorian Bar, ph (03) 9225 8757 or email danstar@vicbar.com.au. The full version of these judgments can be found at austlii.edu.au.