Peter Dutton has warned that refugee activist Shane Bazzi should not be awarded $248,000 in costs because that would amount to a “windfall” on top of donations raised to fund his defamation defence.

Despite Bazzi’s win in the full federal court in May, he is still locked in litigation with the Liberal leader, after Dutton’s bid to appeal to the high court and a dispute about costs, to be heard in August.

Dutton sued Bazzi over a now-deleted tweet stating “Peter Dutton is a rape apologist”, winning in the federal court at first instance, including an order for $35,000 compensation, before the decision was overturned on appeal.

According to submissions, seen by Guardian Australia, Bazzi funded his defence in two rounds of fundraising on, because he was unemployed and had limited means to pay for the case.

The fundraisers promised that the funds would pay for Bazzi’s fees and any surplus would be donated to charities including the Refugee Advice & Casework Service and Rape and Domestic Violence Services Australia.

Bazzi incurred a total of $326,000 of legal costs in the case and appeal, but only raised $248,000 through crowdfunding, after admin costs.

Bazzi is seeking costs according to the “indemnity principle”, that the successful party should be indemnified against the expense to which he or she has been put by reason of the legal proceedings.

In submissions on 29 June, Dutton’s lawyers claimed Bazzi should only be awarded the difference between his costs and the amount he raised, about $78,000.

They said donations have been used to pay Bazzi’s lawyers and “nobody has any right to reimbursement of the donations”.

“If Dutton were ordered to pay the full amount of Bazzi’s costs as assessed, then the practical outcome would therefore be a windfall gain for Bazzi.”

Dutton’s lawyers argued a costs order would amount to punishing him for having lost the case and “give a bonus to the successful party”. This may spark “entrepreneurial litigation” in which a successfully crowdfunded litigant could profit from a case, they said.

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In reply submissions of 20 July, Bazzi’s lawyers submitted it would be a “revolutionary” change to the law to allow an “unsuccessful party to inquire into how a successful party funded the payment of his lawyers”.

“Mr Bazzi had a liability for legal costs and used funds to discharge his liability,” they said.

“That persons may have gifted Mr Bazzi money in the crowd-funding is not a concern for the court any more than numerous other transactions that occur every day particularly between family members about how to fund their legal costs when sued.”

Bazzi’s lawyers noted he had made “express representations as to how any excess would be dealt with”.

“There can be no windfall to Mr Bazzi. Mr Bazzi is under a legal obligation to pay the shortfall still owing to his lawyers.

“The evidence … establishes that any excess will be donated in accordance with the representations on which it was raised.”

Bazzi’s lawyers said a costs order against Dutton would not amount to a penalty and there was “no prospect” it would encourage “entrepreneurial litigation”.

In reply submissions dated 27 July, Dutton’s lawyers noted that Bazzi had promised only to use donated funds for his lawyers or for charity.

“But there was no ‘representation’ by Bazzi as to what he would do with money received from Dutton pursuant to a costs order,” they said.

“He is free to use that money as he pleases,” they said, warning it may still be possible for him “to pocket any funds received pursuant to a costs order in his favour”.

The costs case will be heard on 12 August.

Source: The Guardian