Australia: Costs incurred in legal proceedings in Victoria and NSW must be proportionate to the matter and sums in dispute

In brief - Lawyers may be directed by courts to pay the other party's costs

In the recent Victorian Court of Appeal judgment of Yara Australia Pty Ltd & Ors v Oswal [2013] VSCA 337, the court found that the legal practitioners acting for the applicants in an unsuccessful appeal had breached their overarching obligations to use reasonable endeavours to ensure that the costs incurred were reasonable and proportionate to the complexity and importance of the issues and sums in dispute.

Overarching obligations of legal practitioners under the Civil Procedure Act 2010 (Vic)

The ANZ, receivers appointed by the ANZ and two other applicants had sought security for costs in proceedings in the amounts of $86,361, $31,808.20 and $22,810.80 respectively. Associate Justice Efthim awarded security, but those orders were set aside by Whelan J.

An application to the Court of Appeal for special leave to appeal from the orders of Whelan J was refused and the question of costs was dealt with in the joint judgment delivered by Redlich JA, Priest JA and Macaulay AJA on 27 November 2013.

The court observed that the enforcement of the overarching obligations under the Civil Procedure Act 2010 (Vic) ("the Act") had not previously been considered in any detail at appellate level. The court took the opportunity in its judgment to discuss the overarching obligations at length so as to provide guidance to judicial officers and practitioners.

Purpose of Civil Procedure Act 2010 (Vic) and Civil Procedure Act 2005 (NSW)

The Victorian court noted that the Act's purpose was to reform and modernise the laws, practice, procedure and processes relating to civil proceedings in Victorian courts. The need to ensure that costs were reasonable and proportionate was a core objective.

The court noted that it is obliged to give effect to the overarching purpose of the Act "to facilitate the just, efficient, timely and cost effective resolution of the real issues in dispute."

This is similar to the terms of the Civil Procedure Act 2005 (NSW), where the overriding purpose of the Act is expressed to be to facilitate the just, quick, and cheap resolution of the real issues in the proceedings.

Lawyers' overarching responsibility cannot be set aside because of instructions of client

Significantly, the Victorian court noted that the legal practitioner will not be relieved of this overarching responsibility because of the instructions of their client:

The legal practitioner's duty is non-delegable. The obligation will override their duty to their client where the discharge of that duty would be inconsistent with the overarching obligations. The legal practitioner will not be relieved of this overarching responsibility because of the instructions of their client. [14]

Level of representation required and extent of material to be filed with the court

The court also commented that the legal practitioner must give careful consideration to the level and extent of the representation that is necessary for a party:

Even where a party provides informed instructions to their legal practitioners that they wish particular counsel to be briefed, the legal practitioners who act on their behalf have an overriding duty to consider whether, having regard to their overarching obligation to ensure costs are reasonable and proportionate, the engagement of particular counsel will contravene the Act. [36]

The overarching obligation is also relevant to the extent of material to be filed with the court.

The court noted that the Act is designed to protect against the inappropriate use of the courts as a public resource:

Overly voluminous application material strains the administrative resources of the Court and the time of Judges themselves. Where a large volume of material is provided to the Court that is unnecessary and excessive, there will be a prima facie case that the overriding obligation has been breached. [40]

Level of representation of applicants found to be not excessive

Each of the four applications for security for costs was supported by submissions that were to a large extent in the same terms. The court noted that the applicants were represented by seven counsel, three of them senior counsel.

The court accepted that each applicant had a separate and distinct interest and was entitled to separate representation, and the Act does not require a party to forfeit that right. The court also accepted that the parties were not overrepresented in this matter:

In the context of the broader litigation, which is likely to be immensely complex and expensive, it was appropriate that each party be represented in this application by the counsel that were engaged. [39]

The court also noted that the conduct of counsel at the hearing itself did not breach the overarching obligation as there is no unnecessary duplication of submissions, with parties simply adopting the primary submissions and, when necessary, making "discrete and brief but important submissions which were relevant to the client's position." [38]

Material in application books found to be excessive and unnecessary

The court's real concern was with the material in the application books.

The court was provided with six application folders, comprising submissions, affidavit material, transcript and authorities running to over 2,700 pages. The court considered "much of this material was either peripheral to the application or entirely unnecessary." [40]

The court stated:

The Act's objective is the reform of the culture of unnecessary expenditure in civil litigation. Parliament has intended that this reform can only be achieved by holding parties to account for undesirable civil litigation practices that are unfortunately too common. The Court was burdened with excessive material. The applicants and the respondent were burdened with the cost of that material. There has been a breach of the overarching obligation to ensure that costs are reasonable and proportionate by including in the application books voluminous material that was extraneous or repetitious and excessive. [52]

Solicitors for appellants penalised by cost orders

The respondents argued for indemnity costs. The court accepted that the applicants had not "engaged in unmeritorious or deliberate improper conduct such as would warrant the Court showing its disapproval and at the same time preventing the respondents being left out of pocket." [57]

The court did, however, penalise the solicitors for the appellants with the following orders:

  • each applicant pay the respondent's costs
  • each applicant's solicitor indemnify the applicant for 50% of the respondent's costs incurred as a consequence of the excessive or unnecessary quantum of the application books
  • each applicant's solicitor be disallowed recovery from the applicants of 50% of the costs relating to preparation of the application books and the costs incidental thereto

The court further directed that the solicitors for each of the applicants provide their clients with a copy of the reasons of the court and of the orders.

Courts in NSW also take a dim view of excessive material being filed with court

In an earlier decision delivered by RS Hulme J in Harris v Villacare Pty Limited [2012] NSWSC 452, following the hearing of an application for preliminary discovery, his Honour had cause to query whether the incurring of costs should be borne by the solicitors personally. Significantly, the judge's concern was the volume of material that had been filed by way of supporting affidavit by the defendant's solicitor. The affidavit was four and a half pages long and attached 78 pages of annexures separated by 25 dividers.

The judge referred to section 56 of the Civil Procedure Act and emphasised its requirement that the parties identify each relevant component of the "real issues in the dispute or proceedings". Hulme J was critical of the affidavit and went so far as to describe 90% of it as "a waste of paper" that failed to address the real issues in dispute.

Although the judge did not find any "serious neglect, serious incompetence or serious misconduct" by the actions of the defendant's solicitor, he was of the view that costs had been incurred "without reasonable cause".

Courts should not be deluged with unnecessary supporting documents

The quantum of the costs was small in this case, however it was apparent that the judge wanted to impress upon the solicitors involved the significance of the "overriding purpose" of the Civil Procedure Act.

Notably, he opined:

One of the most important tasks of lawyers engaged in litigation is to sort the relevant from the irrelevant and to make the judgments enabling this to occur. Experience over 40 years shows that, increasingly, this is not being done and the Court and the parties are obliged to deal with, as occurred here, 50 or so pages and in other cases hundreds of pages when, at the most, one or a much smaller number would do. Although the circumstances are different, one only has to reflect on the number of occasions when, of hundreds of documents included in the "Tender Bundles" only a relative few are referred to, to illustrate the point.

Whether the change in practice is inspired by a greater fear of being sued, or the fact that charging for time or copies often rewards an increase in the size of the task or in the volume of paper, or simply avoids having to make decisions, there can be no doubt that the courts are being deluged with material that years ago would not have passed solicitors' desks or counsel's chambers and should not now.

Lawyers must be wary of incurring excessive costs or risk penalties

It is now clear that, in both jurisdictions, legal practitioners must use reasonable endeavours to ensure that the costs incurred in connection with a proceeding are reasonable and proportionate to the complexity and importance of the issues and the amount in dispute.

The courts will now examine the level of representation and the relevance of the material filed with the court. If the practitioner is found in the conduct of proceedings to have breached the overarching obligations, the practitioner personally may be ordered to pay the extra costs incurred by the other party and prevented from recovering those extra costs from the practitioner's own client.

Melissa Fenton Nigel Watson
Commercial litigation
CBP Lawyers

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Melissa Fenton
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.