LFDB v SM (Costs) — Federal Court orders indemnity costs paid immediately

Case
LFDB v SM (Costs)
Court
Federal Court of Australia
Judge
Ian McNeil Jackman (Attorney-General Mark Dreyfus, 2023)
Date Decided
7 October 2026
Citation
[2026] FCA 1473
Topics
costs, indemnity costs, vexatious proceedings, interlocutory applications

Background

LFDB brought an interlocutory application dated 19 March 2026 concerning the registration of a New Zealand judgment. Jackman J dismissed that application in August 2026, holding that the relief sought was barred by cause of action estoppel and issue estoppel, and, alternatively, by Anshun estoppel.

The Court subsequently found that application to be a vexatious proceeding because it was made without reasonable ground. SM then sought her costs on an indemnity basis as a lump sum, payable immediately. LFDB argued that costs should instead be assessed on the ordinary party-party basis, capped at $15,000 and payable only when the proceeding concluded.

The Court’s Holding

Jackman J ordered LFDB to pay SM $25,842.60 immediately, being SM’s indemnity costs of the 19 March 2026 interlocutory application. The application was plainly within the established basis for indemnity costs: LFDB, properly advised, should have known it had no prospect of success.

The order was also reinforced by LFDB’s earlier unsuccessful attempt to join SM’s former solicitors to the proceeding, which had required SM to retain new solicitors and had itself been found vexatious. The Court accepted SM’s solicitor’s affidavit as a sufficient foundation for a broad-brush lump-sum assessment and adopted the midpoint of the proposed range. Although the costs arose on an interlocutory application, the Court considered the proceeding effectively finished and ordered immediate payment for fairness and certainty.

Key Takeaways

  • Indemnity costs may be awarded where a party pursues a case that it should have known was hopeless.
  • A solicitor’s detailed affidavit can support a lump-sum costs order through a broad-brush assessment.
  • The Court may require immediate payment of interlocutory costs where the proceeding is effectively complete.

Why It Matters

The decision illustrates the financial consequences of pursuing proceedings barred by estoppel and found to be without reasonable ground. It also confirms that conduct causing unnecessary costs, including an unjustified attempt to join an opposing party’s lawyers, can support an indemnity costs order.

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