Background
This costs judgment follows the trial decision in DC Rd DC Pty Ltd v Zhang (Trial Judgment) [2026] FCA 16, delivered on 23 January 2026. The underlying proceedings involved a complex commercial dispute spanning multiple years in which the applicant DC Rd Pty Ltd sought recovery for alleged fraud, misappropriation of funds, misleading conduct, and breach of trust by sixteen respondents. The applicants sought lump sum costs orders totalling $4.97 million, with liability variously opposed and challenged by different respondent groups including the “Bob Parties,” the “Lian Parties,” and John.
The central dispute concerned the misappropriation of funds known as the “DC Rd Proceeds.” Some respondents were found liable as perpetrators of the fraud; others were found liable as volunteer recipients of traced funds; and one respondent (John) was joined late in the proceedings and had more limited involvement. The applicants achieved substantial success in proving their primary claims, though they did not succeed on every issue raised at trial.
The Court’s Holding
Justice Jackman rejected arguments that the applicants should be denied or significantly discounted costs due to their failure to succeed on all issues. The court found that the applicants’ substantial and broad-based success across multiple causes of action—including tracing claims, personal remedies, and proprietary relief—warranted full recovery of costs despite some discrete losses.
The court exercised its discretion to apportion liability for costs between respondent groups rather than impose uniform joint and several liability. Justice Jackman allocated 70% of costs to the Tony Parties and Bob Parties, who jointly orchestrated the central fraud; 15% to the Lian Parties, who were volunteer recipients of traced funds with no fraud findings against them and limited involvement; and 15% to John, a late-joined respondent with even more circumscribed participation and a mere 15% apportionment of liability on the misleading conduct claim. This apportionment reflected the court’s view that imposing full costs liability on the Lian Parties and John would be unfair given their significantly more limited involvement compared to the primary wrongdoers.
The court ordered lump sum costs in the apportioned amounts sought by the applicants—$3,480,079.98 for each of the Tony Parties and Bob Parties, and $745,731.42 for each of the Lian Parties and John—totalling $4,971,542.83. Justice Jackman found lump sum orders appropriate to avoid the substantial delay and expense of formal taxation proceedings in complex, lengthy litigation. The court accepted the applicants’ costs evidence from senior litigation solicitor Mr Korbel (based on Corrs’ internal accounts) and found the approximately 25% discount applied by the applicants to be reasonable and broadly reflective of what a taxation would yield, given the difficulty and complexity of the matter.
Key Takeaways
- Courts have discretion to apportion costs liability between respondents based on their degree of involvement and culpability, rather than imposing uniform joint and several liability across all defendants.
- Lump sum costs orders are favored in complex, multi-year commercial litigation to avoid prolonged and costly taxation proceedings, provided the evidence permits a fair estimate of likely taxed costs.
- A discount of approximately 25% from claimed costs is within a reasonable range for litigation of this complexity and sophistication, and will be approved by courts assessing the fairness of a lump sum estimate.
- Consulting expert fees can be recovered as recoverable disbursements even when the expert does not testify in court, provided the expert’s work was directly relevant and necessary to the conduct of the proceedings—it would discourage use of expert assistance if costs were recoverable only if the expert gave oral evidence.
Why It Matters
This judgment clarifies critical principles governing the apportionment of costs liability in multi-party commercial litigation, particularly where respondents have vastly different roles in the underlying wrongdoing. Rather than imposing a uniform “winner takes all” approach to costs, the court recognized that justice between parties is served by tailoring costs liability to each respondent’s actual involvement. This principle protects peripheral parties or late-joiners from bearing full costs liability when their culpability or involvement is demonstrably less than primary perpetrators. For practitioners, the decision confirms that lump sum costs orders remain the court’s preferred mechanism in complex litigation, and that courts will robustly scrutinize but ultimately accept reasonable costs estimates supported by detailed solicitor evidence.
The holding on recovery of consulting expert fees also has practical significance: it dispels any notion that expert costs are recoverable only upon courtroom testimony, opening the door to compensation for substantial expert work undertaken to investigate claims and prepare case materials—a particularly important principle in cases involving complex asset tracing or financial forensics, where much of the expert work supports written evidence or legal strategy rather than cross-examination.
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