In this matter the Court considered a costs application by the State of Western Australia (State), as third cross-claimant, following the State's successful application for various cross-claims to be determined prior to further programming or hearing of the principal proceeding and first cross-claim: Buurabalayji Thalanyji Aboriginal Corporation v Onslow Salt Pty Ltd (No 4) FCA 1275.
The State's application was primarily determined on the basis that it is just and convenient for the cross-claims to be heard first to prevent the potential injustice of the cross-claimants being denied their asserted right to rely on a purported covenant not to be sued.The scope and existence of that contractual right is in issue in the cross-claims.
The Court noted that the power to order costs under s 43 of the Federal Court of Australia Act 1976 (Cth) is a broad discretionary one which must be exercised judicially. Ordinarily costs follow the event. Thus the Court needed to decide whether to exercise its discretion or depart from the usual course.
His Honour noted that the State's application for a separate hearing centred around a purported covenant not to sue and the existence of those rights is "central to the assessment of where costs ought to appropriately fall", at .
Consequently, his Honour held that the costs of the application should be reserved pending the outcome of the cross-claims.
McKerracher J ordered that the costs of the application and these reasons be reserved pending the determination of the cross-claims.