Bellamy’s refused at second attempt to cost cap plaintiff case

Application for leave to appeal from refusal of ‘costs capping’ orders – Neither Décor limb made out – Leave to appeal refused

This was an application for leave to appeal from a decision of Beach J, in which his Honour dismissed an application by the present applicant (the respondent in the substantive proceedings below) (BAL) for a ‘costs-capping’ order, so as to limit the parallel class actions brought by Maurice Blackburn and Slater & Gordon to the costs of one proceeding, specifically $4.46 million across both proceedings or $2.23 million in each proceeding (see McKay Super Solutions Pty Ltd (Trustee) v Bellamy’s Australia Ltd (No 2) (2019) 135 ACSR 278; [2019] FCA 215).

In this application, BAL no longer sought costs capping to a specific value, but simply that the two proceedings be treated and assessed as one set of costs (i.e. one set of counsel and one firm of solicitors) ([4]).

BAL had raised five proposed grounds of appeal, but the ‘key issue’ was said to be whether a respondent should be exposed to duplicated costs due to identical or substantially similar competing actions ([9]). It contended that the primary judge erred by applying incorrect legal principles and the wrong legal test about costs limitation orders and duplication of work ([23], [28], [30]).

The Court (Murphy, Gleeson and Lee JJ) unanimously said that that ‘key issue’ was not appropriate to be resolved in an interlocutory appeal ([10]). They observed that there were three circumstances where such costs may be payable: at initial trial or some interlocutory stage prior, following an initial trial after any declassing or costs paid as part of settlement. BAL’s interests are, or would be, protected in each of these circumstances, either by operation of the Federal Court Rules 2011 (Cth) or by way of the Court’s supervisory and protective role at settlement approval pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth), that costs be fair and reasonable (including whether duplicative or excessive) ([10]-[13]). Further, there was no reason to deal with costs prospectively (the Court was sceptical of BAL’s argument that settlement discussions would be fettered by increased adverse costs if no prospective order was made) and the most practical solution was to address the issue, if necessary, retrospectively at the conclusion of the proceeding ([14]-[15]).

The Court reiterated the ‘tight reign’ on litigants seeking to transfer discretionary decisions of docket judges involving practice and procedure to the Full Court ([5]). Accordingly, the Court refused leave to appeal on the basis that the decision in question was a discretionary case management decision, which didn’t dictate a particular approach had to be adopted ([18], [20], [23]); the Court also noted the asymmetry and unfairness which would result from a one-sided costs capping order ([27]).

Relying on other recent decisions of the Court concerning competing class actions, the Court said: “not only do docket judges have considerable latitude to fashion a solution to deal with multiplicity of class actions, but also that the issue of potential duplication of costs is a relevant discretionary factor in fastening upon the appropriate case management solution” (at [20]).

Accordingly, the Court dismissed the application for leave to appeal, and also invited submissions as to whether BAL should be ordered to pay the costs of the application on an indemnity basis.

Case details

Bellamy’s Australia Ltd v Basil [2019] FCAFC 147

  • Federal Court of Australia, Murphy, Gleeson and Lee JJ, 23 August 2019
  • Applicant’s Solicitors: Minter Ellison;
  • Respondents’ Solicitors: Maurice Blackburn / Slater & Gordon;
  • Respondents’ Funder: ICP Capital Pty Ltd / IMF Bentham Ltd

Read more about this case on Austlii: Bellamy’s Australia Ltd v Basil [2019] FCAFC 147

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