Ruling acknowledges party seeking documents saved other parties time and expense in proceedings
Australia’s Federal Court ordered a plaintiff to pay two parties’ costs in connection with interlocutory processes that requested the production of documents over which the parties asserted legal professional privilege.
In Goyal and Conneely (Liquidators), in the matter of FSM Development Pty Ltd (in liq) (Costs) [2025] FCA 1680, RWC claimed legal professional privilege for more than 2,660 documents, while Keyview sought the same over 1,176 documents.
FSM initiated two interlocutory processes against RWC and Keyview to seek the production of the documents supposedly covered by legal professional privilege. On 12 December 2025, the Federal Court judge dismissed both interlocutory processes.
FSM asserted that it should not pay costs for three reasons. First, FSM alleged that RWC and Keyview failed to sufficiently substantiate their privilege claims before FSM brought the interlocutory processes, which prevented FSM from assessing the claims’ merits, as well as failed to distinguish between claims for legal advice and litigation privilege.
Second, FSM argued that it might or would not have proceeded with its challenge to certain documents if RWC had produced a term sheet earlier.
Third, FSM contended that the interlocutory processes it initiated involved test cases for matters likely impacting the balance of the privilege claims, which would assist in saving time and expense.
The Federal Court of Australia found it appropriate for FSM to pay RWC’s and Keyview’s costs relating to the interlocutory processes.
In response to FSM’s first argument, RWC and Keyview alleged that they:
The court accepted RWC’s and Keyview’s submissions as reasonable.
Regarding FSM’s second argument, the court determined that it could not conclude based on the evidence that FSM would not have moved forward with their challenge to some documents if RWC had produced the term sheet earlier. The court noted that FSM proceeded with its challenge even after receiving the term sheet, produced on the morning of the hearing.
As for FSM’s third argument, the court accepted that FSM adopted a commendable approach through the test cases, which saved all parties considerable time and expense in justifying thousands of privilege claims.
However, the court did not consider FSM’s approach a reason to deny RWC and Keyview the costs they sought. The court noted that a costs order would entail much less expense than if FSM had not adopted its efficient approach.
