Mitchell v Roads and Maritime Services (now known as Transport for NSW) (No 3)

This judgment concerns the issue of costs arising from the judgment I delivered in Mitchell v Roads and Maritime Services (now known as Transport for NSW) (No 2) [2024] NSWSC 1165 (Principal Judgment). This judgment assumes familiarity with, and adopts the shorthand expressions and defined terms used in, the Principal Judgment.

These representative proceedings were brought by the lead plaintiffs, Darren and Rosaline Mitchell, on their own behalf and on behalf of all the persons who have had land compulsorily acquired by the defendant, Roads and Maritime Services (now known as Transport for NSW) (TfNSW) for the WestConnex M4–M5 Link Project.

In the Principal Judgment I determined the application by the plaintiffs for an order to join Litigation Fund WCX Pty Ltd (Funder) as a defendant to the proceedings and for an order pursuant to s 183 of the Civil Procedure Act 2005 (NSW) (CPA) that the funds held by the plaintiffs’ solicitors, Ironbridge Legal, deposited in its trust account by the Funder are held for the benefit of the plaintiffs to be applied towards their legal costs incurred as lead plaintiffs in these proceedings. During the hearing of the application, the Funder also made an oral application to stay it.

For the reasons set out in the Principal Judgment, I concluded that:

As a result of these conclusions in the Principal Judgment, on 20 September 2024, I made orders in chambers giving effect to those conclusions and invited the parties to provide submissions and evidence as to costs which I would determine on the papers.

In summary, the orders sought by the plaintiffs with respect to costs on the application which was the subject of the Principal Judgment are as follows:

TfNSW also seeks an order that the Funder pay TfNSW’s costs of the application.

The Funder opposes these proposed costs orders, but does accept that it is appropriate for the Funder to pay the plaintiffs’ costs to be assessed on an ordinary basis.

For the reasons set out below, I have concluded that:

The relevant facts underlying the plaintiffs’ application are set out in full in the Principal Judgment at [8]–[81] and there is no need to repeat them here. Set out below are such additional facts which are not mentioned in the Principal Judgment but are relevant for the purposes of determining the issue of costs.

On 7 June 2024, Ironbridge sent a letter to Mr Coshott stating that it was unclear as to how various materials contained in the exhibit accompanying his affidavit of 20 May 2024 (Exhibit RC-1) were relevant to any issue in the application. The letter concluded by notifying Mr Coshott that unless he provided a satisfactory explanation for the inclusion of the material in Exhibit RC-1, the plaintiffs would object to the admission of it and sought a detailed response by 5pm on 12 June 2024. Ironbridge did not receive any response from Mr Coshott by that time.

On 26 June 2024 at 12:25pm, Ironbridge sent an email to Mr Coshott referring to their letter of 7 June 2024 and noting that Exhibit RC-1 also contained material that appeared to be privileged and over which the plaintiffs had not waived privilege, including correspondence and legal advice provided to the plaintiffs by Ironbridge or their former solicitors. Ironbridge asked Mr Coshott to confirm what material from his affidavit and Exhibit RC-1 the Funder intended to tender at the hearing, requesting that Mr Coshott provide a substantive response no later than 4pm on 28 June 2024. The email concluded by indicating that, in the absence of a substantive response from Mr Coshott, the plaintiffs would be required to prepare an affidavit and submissions setting out why and how each of the documents in Exhibit RC-1 were privileged and would seek a costs order against the Funder if they were required to prepare those further documents.

On 26 June 2024 at 2:01pm, Mr Coshott sent an email to Ironbridge stating that the materials in Exhibit RC-1 were relevant to the plaintiffs’ assertions regarding Ironbridge’s trust account practices and to establishing that the Funder had, by the time that Ironbridge was instructed, already satisfied its obligation to provide funds pursuant to the Funding Agreement.

On 27 June 2024, Ironbridge sent an email to Mr Coshott contesting the relevance of the material in Exhibit RC-1 to any issue in dispute in the application and objecting to the admission of it. Ironbridge noted that Mr Coshott had not responded to the request that he clarify what material the Funder was proposing to tender at the hearing and asked for a substantive response by no later than 4:00pm on 28 June 2024. The email concluded by noting that it was critical for Mr Coshott to provide this confirmation to allow the plaintiffs to determine their position in respect of the privileged material in Exhibit RC-1 and repeated that if the Funder pressed for the admission of privileged material, the plaintiffs would seek a costs order against the Funder in relation to the further work required to prepare evidence and submissions to establish the privilege. Ironbridge did not receive any response from Mr Coshott by the time stipulated.

On 3 July 2024, Ironbridge sent a further email to Mr Coshott referring to his affidavit and Exhibit RC-1, noting that they had previously communicated to Mr Coshott that Exhibit RC-1 contained privileged and/or irrelevant material and Mr Coshott had not indicated what material the Funder intended to tender at the hearing. Ironbridge attached an objections schedule outlining the material to which objection was taken and a redacted copy of Exhibit RC-1 containing markings of the parts of each document, the admission of which was the subject of objection on the basis of privilege and/or relevance. The email concluded by requesting that Mr Coshott let Ironbridge know whether he agreed that this material was privileged and/or not relevant and should be redacted, and stated that they intended to provide TfNSW with a redacted version of Exhibit RC-1.

On 5 July 2024, Radith Khan, a solicitor employed by Ironbridge, affirmed an affidavit in support of the plaintiffs’ claim of legal professional privilege in respect of certain materials in Exhibit RC-1 (Khan affidavit), which was filed by the plaintiffs on 5 July 2024 but ultimately not read at the hearing.

On 8 July 2024, during the hearing of the plaintiffs’ application, I had the following lengthy exchange with Mr Cooper (counsel for the plaintiffs) and Mr Coshott in relation to the proposed tender by the Funder of the materials in Exhibit RC-1, which ultimately resulted in the Funder stating that it was not relying on the privileged material in Exhibit RC-1 (T6–12):

As a result, it was not necessary for the plaintiffs to read the Khan affidavit at the hearing of the application.

TfNSW appeared at the hearing and provided confined written and oral submissions on the plaintiffs’ application.

In essence, TfNSW did not oppose the joinder of the Funder to the proceedings and did not wish to be heard in relation to the determination of the ownership of the funds held by Ironbridge in its trust account.

TfNSW indicated that it intended to seek payment of its costs of, and incidental to, the application by the unsuccessful party.

On 30 July 2024, Infralegal sent a letter to Ironbridge indicating that it acted for a group member who wished to be substituted as the representative plaintiff in these proceedings and seeking confirmation of its understanding that the court had been told that Mr and Mrs Mitchell did not wish to remain as the representative plaintiffs and would not oppose the substitution.

On 13 September 2024, I delivered the Principal Judgment.

On 14 September 2024, Ironbridge issued an invoice to the plaintiffs in the sum of $106,413.50, including professional fees of $95,992.50, disbursements of $747.95 and GST of $9,673.05 (14 September invoice).

On 14 September 2024 at 4:57pm, Ironbridge sent an email to the plaintiffs which attached the 14 September invoice, noting that counsel fees remained to be invoiced. In the email, Ironbridge stated that as at 13 September 2024 they held $135,180.55 in trust for the plaintiffs and in light of the Principal Judgment they had transferred $12,353.00 from the trust account to pay a previous invoice, leaving a trust account balance of $122,827.55. Ironbridge requested the plaintiffs to authorise payment of the 14 September invoice of $106,413.50 from the monies held by them in trust.

On 14 September 2024 at 5:35pm, the plaintiffs sent an email to Ironbridge authorising payment of the 14 September invoice.

On 14 September 2024 at 5:39pm, Ironbridge sent an email to the plaintiffs stating that the 14 September invoice was “[a]ll paid” and that the trust funds had been transferred.

Accordingly, Ironbridge currently holds $16,414.05 in its trust account ($122,827.55 less $106,413.50), which is insufficient to meet the full amount claimed by the plaintiffs for its costs of the application and the estimated costs of this costs application in the sum of $134,607.95 (excluding GST) or $148,068.75 (including GST) on an indemnity basis, the claimed basis for which amounts I have set out in more detail below.

On 18 September 2024, Ironbridge sent a letter to the Funder enclosing the plaintiffs’ proposed short minutes of order and setting out the bases upon which the plaintiffs seek an order for their costs on an indemnity basis, a gross sum costs order be made and their costs be payable forthwith, the substance of which I have dealt with in this judgment. The letter also stated that there was no substantial evidence before the court of the Funder’s ability to meet a costs order and invited the Funder to provide any material to demonstrate that it could, failing which the plaintiffs would consider an application for a non-party costs order against Mr Coshott.

Later on 18 September 2024 at 4:18pm, the Funder sent an email to Ironbridge setting out the Funder’s position on each of the plaintiffs’ proposed orders. No basis was put forward by the Funder as to the orders with which it did not agree.

On 23 September 2024, the Funder filed a notice of intention to appeal the decision in the Principal Judgment. No submissions have been made to me by the Funder as to the relevance of that matter.

In support of the application for costs, affidavit evidence has been provided from Trevor Withane of Ironbridge, who is a solicitor of 16 years’ standing, 6 years of which have been as a solicitor admitted in New South Wales and 10 years of which have been as a solicitor admitted in England and Wales. In addition, Mr Withane practised as a barrister in England and Wales for approximately 2.5 years.

The evidence of Mr Withane is that of the amount of $106,413.50 inclusive of GST ($96,740.45 exclusive of GST) contained in the 14 September invoice, $70,614.50 inclusive of GST ($64,195.00 exclusive of GST) is directly referable to the application as the costs reasonably and necessarily incurred for the advancement of the application. He has marked the entries on the schedule of professional fees accompanying the 14 September invoice with red rectangles to signify those items which do not form part of the costs sought for the application, with the balance of the unmarked entries forming part of the calculation which he has made of the costs of the application.

The evidence of Mr Withane is that:

It appears that the total costs claimed by the plaintiffs in relation to the application (including this costs application) on an indemnity basis is $134,607.95 ($123,837.95 plus $10,770.00).

The first issue for my determination is whether the plaintiffs should receive an order for costs on an indemnity basis.

The principal statutory provision containing the court’s powers as to costs is s 98 of the CPA, which relevantly states:

The discretion to award costs under s 98 of the CPA is broad and the section itself is to be construed liberally: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11, Gaudron and Gummow JJ at [21]. The discretion is, however, subject to the rules of court, including the Uniform Civil Procedure Rules 2005 (NSW) (UCPR).

Rules 42.1, 42.2 and 42.4 of the UCPR relevantly provide:

A number of observations regarding the exercise of the discretion to award costs made by McHugh J in Oshlack at [67]–[68] should be kept in mind, as summarised below:

As is plain from s 98(1)(c) of the CPA, the court has the discretion to order that costs be awarded on the ordinary basis or on an indemnity basis.

Rule 42.5 of the UCPR provides:

There is a general rule that a trustee who has acted honestly is entitled to an indemnity of the trust fund for any legal costs incurred in administration of the trust: Miller v Cameron (1936) 54 CLR 572 at 578–579; [1936] HCA 13. A legal personal representative may be similarly entitled to be paid legal costs out of the estate on an indemnity basis: Nowell v Palmer (1993) 32 NSWLR 574, Mahoney JA (Meagher and Handley JJA agreeing) at 581. The indemnity basis for the recovery of such costs is commonly referred to in shorthand as “trustee’s costs”.

There is also specific provision in r 42.25 of the UCPR for the court to make an order with respect to the costs incurred by a person who is a party to proceedings in the capacity of trustee to be entitled to be paid their costs out of the fund held by the trustee.

In G E Dal Pont, Law of Costs (5th ed, 2021, LexisNexis Butterworths), the author at [16.34] said as follows (citations omitted):

The “main illustrations” then discussed by in Dal Pont at [16.35]–[16.38] respectively are trustees, a director against the company and the costs of lawyers engaged by liquidators.

At [16.35], Dal Pont deals with costs orders made in favour of trustees, saying (emphasis added, citations omitted):

The case cited in Dal Pont for the proposition that a person appointed to represent a class merits a more generous costs order than one made on the ordinary basis is NIAA Corporation Ltd (in liq), Miller v Hindmarsh, Supreme Court of New South Wales, 3 September 1993, unreported, BC9303640, which involved respective defendants who had each been appointed to represent a class of creditors of the company and the purpose of the proceedings was to determine the respective rights of those classes of creditors in relation to certain funds held by the company and under the control of the liquidators. McLelland CJ in Eq said at 2:

In Latham v Hubbard; Estate of Ross [2014] NSWSC 805, White J at [17] cited an earlier version of Dal Pont, extracting a passage in which the author described the situation where a court makes an order entitling a trustee to costs out of the trust fund, noting that the court will commonly order that such costs be quantified on an indemnity basis, also termed the “trustee” or “common fund” basis, which “reflects the policy that persons engaged in proceedings in a representative capacity should not, if a costs order is made in their favour, be out of pocket because of the litigation”. White J said at [18]:

There do not appear to be any authorities on the basis on which costs should be ordered in favour of plaintiffs acting in representative proceedings under Pt 10 of the CPA. As I noted in the Principal Judgment at [130]:

While I discern that there is no general principle in any of the authorities that a party who commences proceedings on a representative basis is generally entitled to an award of their costs on an indemnity basis, that factor together with the other particular factual circumstances of the case will form part of the general discretion whether to award costs on an indemnity basis.

A summary of the relevant principles relating to the discretion to award costs on an indemnity basis based on the conduct of a party can be found in Cappello v HomeBuilding Pty Ltd [2023] NSWCA 109, in which Mitchelmore JA (with whom Simpson AJA and Meagher JA agreed) at [46]–[48] stated:

As I have already mentioned, r 42.5 of the UCPR details the costs to be allowed when the court orders that costs are to be paid on an indemnity basis.

The plaintiffs seek their costs of the application and this costs application on an indemnity basis, to be paid as a specified gross sum in the amount of $148,068.75 (including GST), and payable forthwith. The plaintiffs also request liberty to apply for a personal costs order against Mr Coshott, to be exercised if the Funder does not pay its ordered costs within 14 days.

The submissions of the plaintiffs in support of their application that the Funder should pay their costs on an indemnity basis can be summarised as follows:

The submissions of the Funder in relation to the plaintiffs’ application for an indemnity costs order can be summarised as follows:

The submissions in reply of the plaintiffs to the Funder can be summarised as follows:

In all the circumstances of this case, I consider that the plaintiffs should receive their costs on an indemnity basis.

The plaintiffs were successful in their application, entitling them to an order for their costs, which the Funder concedes. The application was one that the plaintiffs were effectively forced to bring because the Funder was demanding the return of the funds in the Ironbridge trust account. As I found in the Principal Judgment at [204]:

Those legal fees, disbursements and costs were being incurred by the plaintiffs in their position as representatives of the members of the class to whom they owed fiduciary duties in the conduct of the proceedings under Pt 10 of the CPA. The plaintiffs were put to the expense of bringing an application in respect of funds to which the Funder was asserting title so that the members of the class could have the benefit of the legal work to which those fees, disbursements and costs related. The plaintiffs could not allow the Funder to obtain those funds without asserting their own interest in those funds on behalf of all group members. I consider that the observations in Dal Pont about a party incurring costs in a representative capacity and the parallels with the circumstances and the decision in NIAA Corporation are apt. The plaintiffs should not be left out of pocket for making an application of the type which was protective of the interests of those for whom they are representative and owe fiduciary duties. The fact that this included their own interests does not disentitle them from obtaining such an indemnity.

This conclusion is fortified by my finding in the Principal Judgment at [146] that the dispute as to the ownership of the funds in the Ironbridge trust account was:

I consider that by the Funder making a demand for the payment of the funds in the Ironbridge trust account to it, the plaintiffs were placed in a situation where they had no alternative other than to make an application to the court to resolve the dispute over those funds. Until that dispute was resolved, the plaintiffs did not have sufficient funds of their own to progress the proceedings on behalf of the group members to whom they owed fiduciary duties. Those circumstances require that the plaintiffs be fully compensated by the Funder paying the plaintiffs’ costs on an indemnity basis. Such an approach meets the considerations mentioned in Oshlack at [67]–[68], particularly resting on the fairness between the plaintiffs and the Funder due to conditions which had been created by the Funder.

Although the presentation of the Funder’s submissions at the hearing of the plaintiffs’ application was of little assistance to me across multiple bases, I do not consider that it could generally be described as being at the level of “unreasonable” in the sense described in Cappello. Many of the arguments that were put did not have a sound basis but I do not consider them, when assessed as a whole, to be groundless or hopeless. In this regard, I have given particular weight to the fact that an application of the sort made by the plaintiffs was novel in the context of Pt 10 of the CPA and it was not clear on the existing authorities that s 183 of the CPA could be used for the purpose that the plaintiffs were seeking.

Many of the arguments that were put by the Funder on this costs application have also been of no assistance to me. The Funder failed to explain why the filing of the notice of intention to appeal the Principal Judgment has any relevance to the costs orders to be made arising from it. Similarly, irrelevant arguments about the purported operation of r 42.34 of the UCPR, the $500,000 funding cap in the Funding Agreement (to the effect of repeating an argument I rejected in the Principal Judgment at [199]) and the proper application of Mitchell v Transport for NSW [2022] NSWCA 141 were also very poorly explained by the Funder.

But the Funder is not to be penalised by an order for indemnity costs for failing to obtain adequate legal representation to present the case in a more soundly reasoned way, or for merely being unsuccessful. The purpose of a costs order is not punitive to the unsuccessful party, it is compensatory to the successful party.

In relation to the Funder having put the plaintiffs to the unnecessary time, trouble and expense of asserting a claim of legal professional privilege in respect of certain materials in Exhibit RC-1, the Funder’s continued reliance on that material until its capitulation on it at the hearing was so thoroughly misconceived, meritless and groundless that I do think that it was unreasonable in a Cappello sense. The Funder’s attempt to adduce clearly privileged material in Exhibit RC-1 as evidence was not required because there was no need for the Funder to contest an assertion that the plaintiffs were not making. The plaintiffs told the Funder why that material was irrelevant and put the Funder on notice that the plaintiffs would be required to prepare an affidavit and submissions setting out why and how each of the documents in Exhibit RC-1 were privileged and would seek a costs order against the Funder if they were required to prepare the further documents. The Funder failed to adequately explain its position in response, leading to the unnecessary work being performed by the plaintiffs.

Even if I were not minded to order that the Funder pay the plaintiffs’ costs on an indemnity basis for the reasons I have set out above, I would have granted an indemnity costs order in respect of the plaintiffs’ costs for performing that unnecessary work. The plaintiffs have not provided me with a break-down of the costs associated with contesting the privileged material but from my own calculations it would appear to be in the region of about $10,000.

The second issue for my determination is whether I should order that the plaintiffs’ costs be paid as a gross sum by the Funder.

Section 98(4)(c) of the CPA gives a discretion to the court to order that costs be paid as a specified gross sum instead of assessed costs. The power to award costs in s 98 of the CPA is expressly subject to the rules of court.

In Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213, Giles JA at [21]–[22] dealt with the matters to be taken into account in determining whether gross sum costs should be awarded and, if so, the approach to be taken by the court in its calculation, saying:

In Hamod v State of New South Wales [2011] NSWCA 375, Beazley JA (with whom Giles and Whealy JJA agreed) at [813]–[820] summarised the relevant principles in the following way:

Ball J in Baychek v Baychek [2010] NSWSC 987 at [11] explained the relationship between a party’s actual costs and the gross sum claimed in these terms:

In undertaking the exercise of calculating a gross sum, in Penson v Titan National Pty Limited (No 3) [2015] NSWCA 121, JC Campbell AJA at [7] said that (citations omitted):

The Court of Appeal of this court recently conveniently stated the relevant principles (principally those distilled in Harrison and Hamod) in Ahern v Aon Risk Services Australia Ltd (No 2) [2022] NSWCA 39, Meagher, White and Brereton JJA saying at [14]–[18]:

The plaintiffs submit that, applying the principles in Hamod, a gross sum costs order is appropriate in this case for the following reasons:

The submissions of the Funder in relation to the making of a gross sum costs order are as follows:

The plaintiffs’ submissions in reply on the issue of a gross sum costs order are as follows:

In my opinion, this is a quintessential case for the exercise of my discretion under s 98(4)(c) of the CPA to make a gross sum costs order instead of an order for assessed costs.

The proceedings have been on foot since 30 March 2021 and yet the evidence has not been completed. The Funder has been funding the proceedings since they were commenced and in that time there have been five changes of solicitors, including by the Funder moving to terminate the Ironbridge engagement letter on 19 April 2024 (as stated in the Principal Judgment at [62]). Given the ongoing history of disputes between the plaintiffs and the Funder, it appears to me that it is highly desirable to avoid the expense, delay and aggravation likely to be involved in a contested and protracted costs assessment between those parties. These are matters which favour the making of a gross sum costs order, as identified in Harrison at [21] and Hamod at [816]–[817].

The Funder has elected not to place evidence before the court of its ability to meet an order resulting from a costs assessment, meaning that I am unable to be satisfied that the Funder as the unsuccessful party has the capacity to meet such a liability, a factor to which weight can be given, per Hamod at [816]–[817].

Further, applying Hamod at [818], it is the conduct of the Funder which has caused the dispute with the plaintiffs which became the subject of the application and unnecessarily contributed to the incurring of costs by the plaintiffs. The Funder made a claim to funds in the Ironbridge trust account and demanded that those funds be paid to it. I have found that the plaintiffs were duty-bound to make the application to resolve the dispute. The outcome is that the plaintiffs appropriately incurred costs which were disproportionate to the result of the application, that result being my finding that the Funder had no entitlement to the funds in the Ironbridge trust account except for any surplus funds remaining in the trust account after the purpose for which those funds are held for the benefit of the plaintiffs has been completed, which will only occur when all legal fees, disbursements and costs incurred by Ironbridge are satisfied (Principal Judgment at [204]–[205]).

Applying the tests outlined in Harrison at [22], Hamod at [819]–[820] and Penson at [7], I am confident that on the materials I have been provided I am able to arrive at an appropriate sum using a broad brush approach that is logical, fair and reasonable, based on an informed assessment of the actual costs incurred by the plaintiffs and which does justice between the parties.

I am to determine the gross sum on the indemnity basis that all costs are to be allowed other than those incurred in breach of the plaintiffs’ duty as fiduciaries (applying r 42.5(a) of the UCPR). The Funder did not submit that any of the costs were incurred in breach of the plaintiffs’ duty as fiduciaries. In my view the plaintiffs are entitled to all of their actual costs of $123,837.95 plus GST (comprising professional fees of $64,195.00 plus GST and disbursements of $59,642.95 plus GST as calculated above), together with the reasonable estimate of their costs in relation to this costs application of $10,770.00, providing a total amount of $134,607.95 plus GST.

In my opinion, applying Hamod at [814] and Ahern at [18], it is not appropriate to apply any discount to this amount because I consider that the plaintiffs have provided accurate and reliable costs evidence in a careful and considered way. In this regard:

As a result, I consider that the plaintiffs are entitled to a gross sum costs order calculated on an indemnity basis in the amount of $134,607.95 plus GST.

The third issue for my determination is whether I should make an order that the plaintiffs’ costs should be payable forthwith by the Funder.

Rule 42.7 of the UCPR provides that:

The effect of the costs discretion in s 98 of the CPA — to be exercised at any stage of the proceedings, and read subject to rr 42.1 and 42.7 of the UCPR — is that an order for the costs of any application is based on the practical result of the application and costs do not become payable until the conclusion of the proceedings, unless there are discretionary factors that require some other order.

There are numerous discretionary factors which might give rise to an order for the costs of an application to be payable forthwith.

In Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1; [2002] NSWSC 432, Barrett J at [10]–[13] said:

In Bowman v Datalec Services Pty Ltd & Ichor Constructions Pty Ltd [2021] NSWSC 1360, Bellew J at [79] helpfully summarised the general principles regarding the discretion under r 42.7 of the UCPR to order costs payable forthwith in the following way (footnotes omitted):

In Pavlovic v Universal Music Australia Pty Ltd (No 2) [2016] NSWCA 31, Bathurst CJ, Beazley P and Meagher JA considered that it is not essential for all three factors outlined by Barrett J in Morningstar to be satisfied to determine that costs should be payable forthwith, stating at [23]–[24]:

In summary, the plaintiffs submit that, contrary to the general rule in r 42.7(2) of the UCPR, the plaintiffs’ costs should be payable forthwith by the Funder because each of the following three factors identified in Morningstar are present:

The plaintiffs also submit that there is no risk that an order that the costs be payable forthwith would stultify the proceedings and the converse is the case because the trust fund has been substantially exhausted by the plaintiffs being compelled to bring the application and deal with mostly unmeritorious submissions advanced by the Funder. The plaintiffs say that until the costs of the application have been paid and the fund replenished, it will be difficult for the plaintiffs and the plaintiffs’ lawyers to take necessary steps they consider are in the interests of the group members to progress the proceedings.

The Funder did not make any separate submissions in relation to whether the costs should be payable forthwith.

I am satisfied that this is an appropriate case in which I should make an order that costs be payable forthwith for the following reasons.

Applying Morningstar at [11], the application was a matter separately identifiable from the rest of the proceedings and involved the Funder, who was made a party to the proceedings only for the purpose of determining the application. The determination of the application against the Funder on the basis set out in the Principal Judgment has now brought the discrete and self-contained matters in the application to an end.

Applying Morningstar at [13], it is clear to me that the final hearing of these proceedings will not be held for at least another year given that the evidence of the plaintiffs and defendant has not been filed or served and opt-out notices have not been issued to the group members. The plaintiffs no longer have any dispute with the Funder and the justice of the circumstances require that the plaintiffs not have to wait until their substantive dispute with TfNSW in the proceedings is determined at some distant time before they can recover their costs of the application.

In relation to Morningstar at [12], I am not satisfied that on the whole the Funder behaved unreasonably in relation to the plaintiffs’ application, notwithstanding my finding above that the Funder’s withdrawn attempt to adduce privileged material was unreasonable.

Applying Pavlovic at [24], it is not essential that all three Morningstar factors need to be made out to exercise the discretion to order that costs be payable forthwith. I am satisfied that if I do not make an order that the costs of the plaintiffs’ application be payable forthwith, the plaintiffs will be kept from their costs of a finally determined aspect of the proceedings for a considerable period of time.

Further, I agree with the plaintiffs that the trust fund has been substantially exhausted by the plaintiffs being compelled to bring the application and until the costs of the application are paid and the fund is replenished, it will be difficult for the plaintiffs to take the necessary steps they consider are in the interests of group members to progress the proceedings.

Balancing all of these factors, I consider that I should depart from the default position in r 42.7 of the UCPR, with the result that the costs of the plaintiffs’ application are to be payable forthwith.

The fourth issue for my determination is what order I should make in relation to the costs of TfNSW.

TfNSW says that it was a respondent to the plaintiffs’ application by reason of the fact that it is the defendant to the substantive proceedings. It says that it did not object to the Funder being joined as a party to the proceedings for the purpose of the relief sought in the plaintiffs’ application and it did not take a position on the substantive matter in dispute, recognising that it was a matter between the plaintiffs and the Funder. But TfNSW says that it incurred costs in considering its position, filing submissions and appearing at the hearing and it acted responsibly in the costs that it incurred by keeping its submissions brief and appearing by junior counsel. TfNSW says that it is appropriate for the Funder to be held responsible for those costs given that it elected to defend the application and failed and that TfNSW should not be left out of pocket for the private dispute between the plaintiffs and the Funder.

The submissions of the Funder in relation to TfNSW’s costs application can be summarised as follows:

I am of the view that the Funder should pay TfNSW’s costs of the plaintiffs’ application because it was a necessary party to that application as the primary defendant in proceedings to which the plaintiffs were seeking to add the Funder as a party. It was necessary for TfNSW to consider its position on the application and appear at the hearing to understand the submissions being made. TfNSW appropriately confined its submissions and appeared by junior counsel.

In the circumstances, as the unsuccessful party on the application, the Funder should pay TfNSW’s costs.

The fifth issue for my determination is whether I should grant liberty to apply to the plaintiffs to make an application for a personal costs order against Mr Coshott in the event that the Funder fails to satisfy the costs order within 14 days.

I do not intend to pre-empt any aspect of an application which the plaintiffs might wish to bring against Mr Coshott. The plaintiffs do not require my liberty to make any such application as they wish against Mr Coshott in relation to the costs orders that I will make. They are free to make whatever application they are advised against Mr Coshott as the circumstances require.

For the reasons set out above, I propose to make the following orders: