Antic v Dimeo Holdings Pty Ltd - [2009] FMCA 740

FEDERAL MAGISTRATES COURT OF AUSTRALIA

ANTIC v DIMEO HOLDINGS PTY LTD & ANOR

[2009] FMCA 740

PRACTICE & PROCEDURE – Costs – assessment under Part 1 of Schedule 1 to the Federal Magistrates Court Rules.

Federal Court Rules, O.23, r.5.4
Federal Magistrates Act 1999 (Cth), s.45
Federal Magistrates Court Rules, rr.21.02, 21.10, 21.11, 21.14, 21.15, 21.16, 21.22, 44.15

Colan Products P/L v Luxon P/L & Anor (No 2) [2002] FMCA 90
Dubow v Fitness First & Amor (No.2) [2006] FMCA 502
Joyce v St George Bank Limited [2005] FMCA 868
Ogawa v University of Melbourne (No.2) [2005] FMCA 1216
Pratt & Ors v Latta & Anor (No.2) [2002] FMCA 43
Rentoul & Poynton (No.2) [2008] FMCAfam 295
Strutt & Anor v Australian Pharmacy Authorities & Ors (No.2) [2007] FMCA 393

Applicant:

MILENA ANTIC

First Respondent:

DIMEO HOLDINGS PTY LTD

Second Respondent:

JOE DIMEO

File Number:

SYG2132 of 2007

Judgment of:

Barnes FM

Hearing date:

21 July 2009

Delivered at:

Sydney

Delivered on:

7 August 2009

REPRESENTATION

Counsel for the Applicant:

Ms M Tibbey

Solicitors for the Applicant:

Legal Aid NSW

Solicitors for the Respondent:

Fisher Cartwright Berriman

ORDERS

The respondents pay the applicant the sum of $20,874.35 in costs and disbursements including the costs of these proceedings.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG2132 of 2007

MILENA ANTIC

Applicant

And

DIMEO HOLDINGS PTY LTD

First Respondent

JOE DIMEO

Second Respondent

REASONS FOR JUDGMENT

On 10 July 2007 the applicant commenced proceedings in this Court against the respondents alleging unlawful conduct under the Sex Discrimination Act 1984 (Cth) and the Disability Discrimination Act 1992 (Cth) and seeking damages by way of compensation.
On 9 April 2008 the respondents made an offer to settle the matter under an offer of compromise made in accordance with Order 23 rule 5.4 of the Federal Court Rules. The offer of compromise included an order that the respondents pay the applicant's costs “as agreed or assessed”. On or about 6 May 2008 the applicant accepted the respondents’ offer of compromise.
Consent orders were signed on 22 August 2008 and filed on 28 August 2008. The proceedings were dismissed. The order consented to by the parties in relation to costs was as follows:
Respondents to pay the applicant's costs as agreed or assessed in accordance with Part 1 of Schedule 1 of the Federal Magistrates Court Rules 2001.
The parties have not agreed on the amount of the costs. On 30 June 2009 the applicant filed an Application in a Case seeking an order that the respondents pay the applicant's costs in accordance with rule 21.10 of the Federal Magistrate Court Rules and the consent orders and also the costs of the application.
The applicant, who relied on affidavits of Lynette Anne Payne affirmed on 23 June 2009 and 20 July 2009, seeks costs in relation to the substantive proceedings based on the items in a Bill of Costs prepared by reference to Part 1 of Schedule 1 to the Federal Magistrates Court Rules. The respondents dispute a number of items in the Bill of Costs.
It appears that initially the solicitors for the applicant may have been of the view that the Bill of Costs had to be filed in the Federal Court Registry for the purposes of taxation. However the order to which the parties consented was not an order that the costs be taxed in the absence of agreement, but rather that the costs be as agreed or assessed in accordance with Part 1 of Schedule 1 of the FMC Rules. Rule 21.11(2) of the FMC Rules (which provides for a Registrar to apply the scale of costs set out in Schedule 2 to the Federal Court Rules “[w]hen taxing a statement of costs”) does not apply in such a case.
The FMC Rules make no specific provision for the manner of assessment of costs under Schedule 1 in the absence of agreement. Where there is a dispute about what costs are payable under Schedule 1, it is open to the Court to refer the issue to a Registrar pursuant to Part 18 of the FMC Rules. However given the manner in which the matter came before me, I heard the application. I note in that respect that it has been suggested that the issue of establishing what costs are due in a particular case under Schedule 1 can only be finally resolved by a court order for costs to be paid in a specific amount (see Pratt & Ors v Latta & Anor (No. 2) [2002] FMCA 43 at [6]) or an order in the form of a declaration that the applicant is entitled to costs in a certain amount for the purposes of a consent order in relation to costs.
Perhaps because of the nature of Schedule 1, there is limited authority in relation to its application. However, as Raphael FM pointed out in Colan Products P/L v Luxon P/L & Anor (No 2) [2002] FMCA 90 (at [7]), the “events based” system in Schedule 1 is “hostage to misunderstanding” (also see Dubow v Fitness First & Amor (No. 2) [2006] FMCA 502 at [1]). His Honour explained that the “events based” scale of costs in Schedule 1 is an attempt to simplify the assessment of costs and to avoid (in appropriate matters) the necessity for costs assessment as occurs in relation to costs awarded in State courts or the Federal Court taxation approach. It is, however, not suited to all proceedings in the Court. Provision is also made in the FMC Rules for determination of disputed costs by taxation as well as for “benchmark” amounts for costs in migration proceedings under rule 44.15 and Part 2 of Schedule 1.
In this case the parties settled the matter on the basis that costs would be as agreed or assessed in accordance with Part 1 of Schedule 1, notwithstanding that there had been extensive pre-trial costs incurred in relation to matters such as requests for further and better particulars and discovery and that interrogatories and discovery are not allowed in this Court unless the Court declares that it is appropriate in the interests of the administration of justice that there be such procedures (see s.45 of the Federal Magistrates Act 1999 (Cth)). Such a declaration was made by Turner FM in this matter on 16 August 2007.
After an unsuccessful mediation on 17 October 2007 the parties consented to further orders for the filing of points of claim, points of defence, further and better particulars and a timetable for discovery. The matter was transferred to my docket. The orders were subsequently varied on 15 February 2008 to allow for amended points of claim and a revised timetable. On that date the matter was listed for hearing commencing 1 September 2008. Five days were set aside for the hearing on the basis of the provisional estimates by the parties as to the time required.
As the parties in this case settled on the basis that costs would be as agreed and in the absence of agreement assessed in accordance with Part 1 of Schedule 1 to the FMC Rules, the suitability of use of an “events based” scale where there are extensive pre-trial procedures is not in issue. Rather, it is necessary to determine (or “assess”) whether the applicants are entitled to the amounts sought for costs and disbursements under Part 1 of Schedule 1.
It is not in dispute that the Court has a discretion in relation to the issue of costs which must be exercised judicially. Each of the parties made submissions in relation to the assessment of costs in accordance with Part 1 of Schedule 1.
The Bill of Costs relied on by the applicant was prepared by reference to the amounts in Part 1 of Schedule 1 as it stood at the relevant time.
The first item claimed is a lump sum of $2,005 as an item under “Stage 1: Initiating or opposing application up to completion of first court day”. This is not disputed by the respondents and should be allowed.
Items 2 to 11 in the Bill of Costs are described as “Daily Hearing Fee” for Court attendances. A “short mention” daily hearing fee of $205 is payable for the court attendance on the “first court day” as well as $205 for each of three “additional events” consisting of two attendances for return of subpoena and attendance at the directions hearing on 15 February 2008.
Counsel for each party appeared at the directions hearing on 15 February 2008. Under rule 21.15, I certify that it was reasonable to employ an advocate to appear for the applicant on 15 February 2008. Hence, under rule 21.16, in addition to the daily hearing fee (which in the case of a directions hearing of one hour is $205) an advocacy loading of $102.50 is payable in accordance with Schedule 1. The applicant has not claimed for an attendance by a solicitor on 15 February 2008. The total under these items is $922.50.
Items 10 and 11 claim a daily hearing fee and advocacy loading in relation to what is described as an “Administrative Listing”. That is not a Court attendance and these items should not be allowed.
In addition, the applicant also sought (items 3, 5 and 9) what was described in the Bill of Costs as an “Advocacy Loading” consisting of an additional $102.50 on three occasions. However this was sought on the basis that a solicitor had appeared for the applicant “on a hearing alone” and that it was reasonable under rule 21.14, which provides that if a solicitor appears on a hearing alone or instructed by another solicitor the amount to which a party is entitled for the hearing is “limited to 150% of the daily hearing fee for 1 solicitor and; a fee for preparation”). However, I am of the view that rule 21.14 is not applicable in relation to a appearances for a first court date and on return of subpoenas. It is clearly intended to apply to situations where a solicitor appears as an advocate on the hearing of a substantive application. Moreover, even if in some circumstances an advocacy loading for counsel may be appropriate in relation to directions hearings (as in relation to the directions hearing on 15 February 2008), the first court date and the two returns of subpoena are not of this nature. There was no appearance by counsel for the applicant on those occasions and I would not allow any loading in relation to those attendances.
The next item claimed in the Bill of Costs (item 12) is the sum of $2,250 for “Stage 4 – Dispute Resolution Litigation Intervention”. Mediation was conducted on 17 October 2007. The respondents did not take issue with this amount, which I allow.
The applicant's claim for $11,045 under items 13 to 16 for “Stage 5 – Preparation for Final Hearing” in Part 1 of Schedule 1 is opposed by the respondents. The Schedule provides a lump sum amount for preparation for a 1 day matter or for a 2 day matter with an additional amount for “[p]reparation for each additional hearing day.” It does so in the context of making separate provision in Stage 6 for attendance at the hearing calculated by reference to the specified daily hearing fees.
In issue is the application of this aspect of Schedule 1 where the matter settled on 28 August 2008 (based on an offer of settlement accepted on 6 May 2008). The applicant seeks the costs of preparation for a five day hearing on the basis that the matter was listed for a five day hearing and substantial work was done by the applicant’s solicitors in the period between the unsuccessful mediation on 17 October 2007 and the consent orders.
The applicant relied on the fact that on 15 February 2008 the matter was listed for hearing on 1 September 2008 and, on the basis of estimates by counsel as to the likely duration of the hearing, was set down for five days. The applicant claimed the sum of $6,770 on the basis that this was the lump sum specified in Stage 5 of Part 1 of Schedule 1 for preparation for a “2 day matter”, as well as three amounts of $1,425, being the Stage 5 scale amounts for preparation for each additional hearing day. This was said to be justified because after the mediation and prior to the acceptance of the offer of compromise, there was a considerable amount of work done in preparation for the hearing (although the Bill of Costs includes in this work two conferences with client and counsel and procedural orders – ADR/mediation which are matters covered by Stage 4). No claim is made in relation to work done after 5 May 2008 the date on which the offer of compromise was accepted. There is no quantification of the actual costs incurred or time taken.
The applicant’s contention proceeds on the basis that the fact that the matter was set down for a five day hearing meant that the applicant was automatically entitled to the sum of $6,770 for a two day matter and that in this case there had also been preparation for three additional hearing days so that the amount for preparation for the five days for which the matter was listed should be recoverable.
The Bill of Costs lists items of work said to have been carried out by the applicant’s solicitors in accordance with directions of the Court, although it also included an item described as “29/01/08 File and serve evidence in reply” despite the fact that there was no evidence filed by the respondents and hence no evidence in reply filed by the applicant.
In her affidavit of 20 July 2009 Ms Payne attested to the fact that the work carried out included responding to lengthy requests for further and better particulars, issuing a number of subpoenas, organising medical examination and providing a letter of instruction for a medical report, completion of categories of documents for discovery and responding to objections as well as preparation, filing and service of affidavits of the applicant and three other witnesses, obtaining various relevant documents and lengthy general correspondence with the respondent’s solicitors. This is not disputed by the respondents.
Counsel for the applicant referred to Pratt & Ors v Latta & Anor (No.2) [2002] FMCA 43 in which Driver FM stated at [8] that:
The amount that a party is entitled to under Stage 5 for preparation is fixed by reference of the length of hearing that a party prepared for, not the length of the hearing that actually transpired
As his Honour went on to explain:
If a party reasonably prepares for a two day hearing but a matter only runs one day then, prima facie, the party is still entitled to costs for preparation for two days. The party should not be penalised for the efficient conduct of the trial.
However as Driver FM, noted this is “prima facie” the entitlement under Schedule 1. That does not mean that it will necessarily be appropriate in all cases (and cf Joyce v St George Bank Limited [2005] FMCA 868 discussed below).
The solicitors for the respondents submitted that no amount should be allowed for Stage 5 costs as the matter settled prior to 1 September 2008, the date on which the matter was set down for hearing. In any event, it was suggested that as the applicant accepted the offer of compromise she could only claim costs up to and including the date of acceptance of the offer. This was not disputed by the applicant who submitted that the preparation costs incurred up to the date of acceptance of the offer warranted recovery of the amount provided for in Schedule 1 for preparation for a five day hearing.
The respondents submitted however that Stage 5 costs were only recoverable in circumstances where the hearing actually eventuated. Reference was made to Colan Products P/L v Luxon P/L. However the fact that there was a hearing in that case does not assist in determining whether hearing preparation costs are recoverable if a hearing does not proceed. In Joyce v St George Bank Limited [2005] FMCA 868 (in which an application was dismissed summarily after a shorter hearing than the two days listed for final hearing) Driver FM proceeded on the basis (which counsel for the respondent in that case accepted) that Stage 5 costs should only be recoverable for a one day matter. That case supports the view that there is no “automatic” entitlement to preparation costs calculated by reference to the number of days for which the hearing is listed (but does not suggest that recovery of Stage 5 preparation costs is limited to matters where a hearing of some kind proceeds).
I note that, contrary to the approach taken in Joyce, in Ogawa v University of Melbourne (No.2) [2005] FMCA 1216 where the applicant had failed to appear at the hearing Phipps FM set the amount of a respondent’s costs under rule 21.02(2)(a) partly by reference to the number of hearing days which counsel for the respondent had indicated may be required despite the fact that the Court heard the matter in less than one day in the absence of the applicant (also see Rentoul & Poynton (No.2) [2008] FMCAfam 295). These cases indicate that each case must be considered on its own circumstances.
As a matter of general principle, the Court should have regard to whether the costs were reasonably and properly incurred and reasonable and proportionate in amount. I am of the view that recovery of an amount for the costs of preparation for a hearing is reasonable under Stage 5 in this case although the hearing did not proceed.
I am not persuaded that the fact that the matter settled prior to the date on which it was set down for hearing means that no amount should be allowed under Stage 5. The “stages” in Part 1, including Stage 5, appear under the heading “Work Performed”. Stage 5 costs are not limited to circumstances where a hearing actually takes place, if preparation costs have been occurred. Were it otherwise, if a matter settled on the morning of the first day on which it was listed for hearing, all of the preparation costs would have been incurred but would not be recoverable. The difficulty in this case is that it cannot be said that all of the preparation for hearing had been completed at the time the applicant accepted the offer of compromise (and the applicant quite properly concedes that no claims are made in relation to any work done, after the date of acceptance of the offer of compromise). I also note that the extent to which the applicant could reasonably prepare for the hearing was to some extent limited by the fact that there was no evidence from the respondent.
The applicant seeks to recover the actual costs incurred in a situation not precisely of the nature provided for in Stage 5 of Part 1 of Schedule 1 (which is designed for relatively straightforward litigation). Much of the work done was necessitated by the manner in which this litigation was conducted. Discovery is not available as a matter of course in this Court. The amount provided for in Schedule 1 should be seen in light of this. In this case Turner FM made a declaration on the first return date that discovery was in the interests of justice under s.45 of the Federal Magistrates Act 1999 (Cth). It may well be that the “events based costs” provided in Part 1 of Schedule 1 to the FMC Rules might not be as apt a basis for determination of disputed costs in a complex matter as taxation under the Federal Court Rules. This case demonstrates the limits of Schedule 1. Nonetheless, the parties in this case settled the matter on the basis that the costs would be as agreed and in the absence of agreement assessed in accordance with Part 1 of Schedule 1 to the FMC Rules.
I am of the view that some allowance for costs should be made for preparation for the hearing to reflect costs properly and reasonably incurred. However I am not persuaded that the preparation costs in this instance should be assessed by reference to preparation for a five day hearing given the stage at which the matter settled.
Consistent with general principles in relation to the purpose of an award of costs, the mere fact that a hearing was listed for five days would not automatically entitle a successful party to the amounts specified in Stage 5 for a hearing of that length.
In this case all of the preparation work for a contested hearing cannot have been performed by the applicant’s solicitors. The respondents did not file any evidence. Hence the applicant did not file evidence in reply. Neither party filed written submissions or carried out pre-hearing preparation in relation to matters such as cross-examination of witnesses. Nonetheless, I accept that the nature of the pre-trial procedures in this case was such that significant expenditure in preparation for a hearing was incurred.

In her affidavit of 20 July 2009 Ms Payne elaborated on the work which was carried out in preparation for the hearing. The files for the matter were said to number approximately eight lever arch files. It was claimed that the applicant's solicitors did substantial and significant work in the period between the mediation on 17 October 2007 and 28 August 2008 when the consent orders dismissing the application were made. I accept that the applicant’s solicitors did such work, which, as set out above, included responding to lengthy requests for further and better particulars; the issue of a number of subpoenas; the organisation of medical examination of the applicant, including preparation of a lengthy letter of instruction; compilation of categories of documents for discovery by the respondents; responses to objections to categories of discovery; preparation, filing and service of affidavits for three witnesses apart from the applicant; requesting, obtaining and perusing documents from Centrelink, Medicare and the Australian Taxation Office; and lengthy general correspondence relating to matters such as the time-table, requests for further and better particulars and settlement of categories of documents.
I note however that one part of this work may be seen as outside what would reasonably be incurred in preparation for the hearing and more properly as within Stage 1, as it is attributable to the fact that in December 2007 the applicant revealed to her solicitors an additional claimed incident of unlawful discrimination involving the respondent that she had not previously disclosed. In the normal course of events all such matters would have been the subject of initial complaint for HREOC and would be included in the original application. In this case a subsequent complaint relating to the incident in question was lodged with the Human Rights and Equal Opportunities Commission and on 15 February 2008 the applicant sought leave to amend the points of claim to include this additional incident.
The applicant's contention is that the matter was set down for a five day hearing and that all preparatory work had been completed by the applicants as required by the directions and on that basis the amount that the applicant was entitled to under Stage 5 was fixed by reference to the length of the hearing that they actually prepared for, not the length of the hearing that actually transpired. However the fact that the applicant incurred substantial costs which (according to counsel for the applicant) would have exceeded the amount which would be allowed in relation to preparation for a five day hearing does not necessarily mean that the amount provided for a five day hearing should be allowed where the parties have agreed to the assessment of costs in accordance with Part 1 of the Schedule 1 “events based” scale.
Insofar as reliance was placed on Pratt & Ors v Latta & Anor (No.2), in Pratt what was in issue was whether, where a matter was listed for a number of days and the applicants reasonably anticipated and prepared for a hearing of that length, they should recover such costs even though the actual hearing did not occupy that period on the basis that the parties should not be penalised for the efficient conduct of the trial. Such authority is of no assistance in the circumstances of this case where the matter did not actually proceed to hearing. Nor is the fact that daily hearing fees are also allowed under Stage 6 in relation to the actual days of a hearing of any assistance in determining the appropriate amount to be recovered under Stage 5.
The respondent submitted that the matter would have occupied no more than two hearing days. This may be somewhat optimistic, given that there were potentially four witnesses for the applicant (including the applicant) and medical reports and no indication before the Court as to the extent of the evidence the respondents would have sought to rely on. The hearing was listed at a time when the extent of the issues in dispute had not been resolved but after orders for discovery and further and better particulars had been made, giving some indication of the possible complexity of the matter.
Doing as best I can on the material before me, I am of the view that the costs of preparation for a three day hearing should be allowed (that is $8,195 consisting of $6,770 for preparation for a 2 day hearing plus one additional preparation day in the sum of $1,425).
Under rule 21.10 a party entitled to costs in a proceedings, is also entitled to disbursements properly incurred. Part 1 of Schedule 5 provides for recovery of disbursements to the extent that they have been reasonably incurred. The respondents did not dispute recovery of amounts sought in relation to medical reports, service fees, subpoenas to produce (item 17 to 27) and these amounts (totalling $3,072.20) should be allowed.
Recovery of “agents travelling costs and taxis” (items 28 to 37) was disputed. Copies of the receipts for taxis are annexed to the affidavit of Ms Payne affirmed on 23 June 2009. I accept that the taxis were not, as the respondents queried, for travel from the Legal Aid Commission to the Court, but rather for travel between the Legal Aid Commission and counsel's chambers and that it was reasonable in all the circumstances for such taxi fares to have been incurred so that it can be said that they were properly incurred. The amount of $79.61 should be allowed for items 28 to 37.
The respondents also took issue with the amount claimed in respect of photocopying ($1,751.04 for 3072 pages @ $0.57 a page). It was suggested generally that 80 per cent should be allowed on the basis of Strutt & Anor v Australian Pharmacy Authorities & Ors (No.2) [2007] FMCA 393. However, as the applicant suggested, the reduction in the photocopying disbursements allowable in that case reflected the fact that two of the three parties were represented by the same solicitor and counsel, so that there had been some duplication in professional services and disbursements as well as the fact that the papers prepared and submitted went well beyond what was actually required for and relevant to the matter. In light of the nature of this matter and the uncontested evidence in the affidavit of 20 July 2009 in relation to the extent of the material in question, I consider that the full amount sought for photocopying ($1,751.04) should in the particular circumstances of this case be allowed as a proper disbursement.
Issue was taken by the respondents with an amount of $146.41 sought by the applicant in relation to a payment to Telstra Corporation to obtain copies of the applicant's own telephone accounts from 1 October 2005 to 6 July 2006. I am not satisfied this cost is recoverable. It does appear that the amount of $146.41 paid to Telstra Corporation included an amount in relation to caller identification records for the applicant's home telephone line for the period 1 October 2005 to 6 July 2006 which related to her allegation that the second respondent had telephoned her at her home on 2 June 2006. This allegation was denied and was clearly a matter in issue. However the material before the Court does not enable me to identify what part of the charge related to this expense and hence no allowance is made in this respect.
The respondents also disputed recovery of an amount of $99 for retrieval and handling of a client’s file from Firths Lawyers. I accept that the issue of previous injuries suffered by the applicant was a matter of relevance to her claim for damages against the respondents. The respondents sought detail of any prior injuries sustained by the applicant including any work-related injury in the request for further and better particulars. Given that Legal Aid New South Wales, the solicitors for the applicant in these proceedings, did not act for her in those previous proceedings I consider that the costs were properly incurred by them in obtaining information from the previous solicitors and should be recoverable.
Hence, the amount of costs recoverable by the applicant in accordance with Part 1 of Schedule 1 to the FMC Rules is $18,374.35.
In addition the applicant sought the costs of the Application in a Case and asked for those costs to be fixed in the sum of $2,500. The Court has power under rule 21.22(a) to set the amount of costs. The respondents contended that the parties anticipated that an assessment may be required, that there were attempts to resolve this by way of correspondence between the parties and that in all the circumstances the parties should bear their own costs of the application. However I am of the view that the applicant should have the costs of these proceedings in all the circumstances and that I should fix the costs under rule 21.02(2)(a). The amount of $2,500 sought by the applicant is appropriate. I note in this respect that the application of Part 1 of Schedule 1 would result in costs of a comparable amount. This means that the respondents should pay the applicant the sum of $20,874.35 in costs and disbursements including the costs of these proceedings.

I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of Barnes FM

Associate:

Date: 7 August 2009