Brewer and Anor v Martin and Ors (No.2)
[2014] FCCA 1341
•27 June 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BREWER & ANOR v MARTIN & ORS (No.2) | [2014] FCCA 1341 |
| Catchwords: CONSUMER LAW – Applicants filed a Notice of discontinuance – respondents apply for costs – question of whether in the circumstances Federal Court Scale of Costs should apply – factors to consider – Federal Court Scale to apply – taxation to be on a party and party basis. |
| Legislation: Federal Court of Australia Rules 2011 (Cth), Part 40 |
| Brewer & Anor v Martin & Ors [2013] FMCA 239 Cachia v Hanes (1994) 179 CLR 403 Latoudis v Casey (1990) 170 CLR 534 |
| First Applicant: | ALAN BREWER |
| Second Applicant: | BREWER FAMILY INVESTMENTS PTY LTD (ACN 127 512 896) |
| First Respondent: | KAYE MARTIN |
| Second Respondent: | AMICI CORPORATION PTY LTD (ACN 133 058 908) |
| Third Respondent: | AMICI PROPERTY HOLDINGS PTY LTD (ACN 132 050 296) |
| File Number: | ADG 276 of 2010 |
| Judgment of: | Judge Simpson |
| Hearing date: | 12 June 2014 |
| Date of Last Submission: | 12 June 2014 |
| Delivered at: | Adelaide |
| Delivered on: | 27 June 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr M Burnett |
| Solicitors for the Applicant: | Gregory James Finlayson |
| Counsel for the Respondent: | Mr L Nicholson |
| Solicitors for the Respondent: | Foster Nicholson Jones Lawyers |
ORDERS
The applicant shall pay the respondents their costs of the proceedings, including costs of and in relation to the respondents’ Application in a Case filed 9 May 2014, on a party and party basis to be agreed or taxed.
If costs are not agreed within 28 days of these orders, or such longer period as the parties do agree, they shall be taxed forthwith in accordance with the Federal Court Scale of Costs.
The Application in a Case filed on 9 May 2014 is otherwise dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADG 276 of 2010
| ALAN BREWER |
First Applicant
| BREWER FAMILY INVESTMENTS PTY LTD (ACN 127 512 896) |
Second Applicant
And
| KAYE MARTIN |
First Respondent
| AMICI CORPORATION PTY LTD (ACN 133 058 908) |
Second Respondent
| AMICI PROPERTY HOLDINGS PTY LTD (ACN 132 050 296) |
Third Respondent
REASONS FOR JUDGMENT
I published my judgment in relation to the respondents’ application for summary dismissal of a portion of the applicants’ claim on 11 April 2013.[1] In those reasons, I made orders that the applicants should pay the respondents their costs of the relevant portion of the proceedings namely for the period 20 April to 2 December 2011 on an indemnity basis and that they be calculated in accordance with the Federal Court Scales of Costs. I also ordered that the proceedings be stayed until payment of the respondents’ costs.
[1] Brewer & Anor v Martin & Ors [2013] FMCA 239
Before the stay was lifted, the applicants, on the 11 April 2014, filed a Notice of Discontinuance.
On 9 April 2014, the respondents filed an Application in a Case seeking an order that, “the applicants pay the respondents’ costs of the proceeding, including reserved costs and the costs of this application, to be taxed in accordance with Part 40 of the Federal Court Rules and the Federal Court Scales of Costs”.
The application was supported by an affidavit of Ms Raphael Brown, a solicitor employed by the firm acting for the respondents.
Ms Brown deposed to the fact that solicitors for the respondents had made an open offer to the applicants inviting the applicants to consent to an order that costs of the proceedings up until 20 April 2011 be payable in accordance with Part 1 of Schedule 1 of the Federal Circuit Court Rules 2001 (Cth) (“the Rules”).
On 29 April 2014, a letter was sent by solicitors for the respondents to the applicants’ solicitor with a minute of consent order seeking an order for costs as mentioned in the previous paragraph. The minute had been signed by, or on behalf of, the respondents. The applicants were invited to indicate that they would consent to the order by signing the minute. The offer was expressed to be open until 4.00pm on 2 May 2014.
The applicants declined to accept the respondents’ proposal where upon the respondents filed their Application in a Case with supporting affidavit. The application sought orders for costs calculated by reference to the Federal Court Scale which scale is generally considered to be a more generous than the Federal Circuit Court scale.
On 12 June 2014, the Court heard submissions in relation to the matters raised in the Application in a Case.
In support of their submissions that the Federal Court scale should apply, it was put to the Court on behalf of the respondents that the litigation was complex commercial litigation involving allegations of misleading and deceptive conduct in relation to an investment company. A very lengthy Statement of Claim had been filed. Numerous affidavits were filed and there was much correspondence passing between the solicitors and counsel for each of the parties. It was further put on behalf of the respondents that an award of costs pursuant to the Federal Circuit Court scale, as identified in Schedule 1 of the Rules, could not do justice to the respondents’ application for costs. The result would be that the respondents were not adequately compensated for the substantial costs that they had incurred.
Counsel for the applicants put that, in the circumstances, the preferable scale to apply would be the Federal Circuit Court scale. It was submitted that, were the Court to order that the Federal Court scale apply, the respondents would be compensated to an extent that would be disproportionate to the nature of the matter before the Court. It was said that an application of the Federal Court scale would be overly generous to the respondents. Counsel for the respondents indicated that the applicants had not gone through the exercise of roughly calculating the extent to which an award of costs pursuant to the Federal Court scale would be greater than an award pursuant to the Federal Circuit Court scale. It was put that it was incumbent on the respondents to prepare such a calculation. In the event, neither party undertook the calculations.
In my view, the applicants, who do not oppose an order for costs being made, should be required to pay costs on the Federal Court scale. I see no reason why the scale to apply should be any different from the scale that applied when I made my earlier orders for costs on 11 April 2013.
The purpose of a costs order is to provide partial indemnity for legal expenses. In the case of Cachia v Hanes[2] the High Court said:
“… the accepted basis for an award of costs is that they are by way of indemnity. They are intended to reimburse a litigant for costs actually incurred; they are not intended to compensate for some other disadvantage or inconvenience suffered by the litigant.
… In corporate litigation of complexity, for example, a litigant may expend considerable time and effort in preparing its case.
Whilst the restricted basis upon which party and party costs are awarded may be debated as a matter of policy, it is to be borne in mind that party and party costs have never been regarded as a total indemnity to a successful litigant for costs incurred, let alone total recompense for work done and time lost.”
[2] (1994) 179 CLR 403 at p414.
In the case of Latoudis v Casey[3] McHugh J expressed the principle in the following terms:
“An order for costs indemnifies the successful party in litigious proceedings in respect of liability for professional fees and out of pocket expenses reasonably incurred in connection with the litigation: Kelly v Noumenon Pty Ltd [1988] 47 SASR 182 at 184. The rationale of the order is that it is just an reasonable that the party who has caused the other party to incur the costs of litigation should reimburse the party for the liability incurred. The order is not made to punish the unsuccessful party. Its function is compensatory. Thus, in civil proceedings, an order may, and usually will, be made even though the unsuccessful party has nearly succeeded or has acted reasonably in commencing the proceedings. It may, and usually will, be made even though the action has failed through no fault of the unsuccessful party. In Cilli v Abbott [1981] 53 FLR 108, Keely, Toohey and Fisher JJ pointed out (at page 111) that “the object of costs is not to penalise; it is to indemnify the successful in regard to expense to which he has been put by reason of legal proceedings; see also Anstee v Jennings [1935] VLR 144 at page 148.”
[3] (1990) 170 CLR 534.
Applying what was said in these cases, in my view, the Federal Circuit Court Scale of Costs is entirely appropriate in normal or routine proceedings but not when, as here, the action is complex and not a routine action for this Court.
The objects of the Federal Circuit Court of Australia Act 1999 (Cth) (“the FCC Act”) include that it is to operate as informally as possible in the exercise of judicial power. Further, the FCC Act states that it is intended that the Court be able to use streamlined procedures and to encourage the use of a range of appropriate dispute resolution procedures. These objects suggest that the Federal Circuit Court’s principle role is as a trial court dealing with a large volume of matters that might be dealt quickly with minimal cost to the parties. I note that one of the criteria to consider if a matter is to be transferred to the Federal Court is whether the resources of the Federal Circuit Court are insufficient to hear and determine the proceedings. A non-routine and complex matter, such as these proceedings, might have been an appropriate matter to transfer to the Federal Court had an application to do so been made by one of the parties. Since these proceedings were non-routine and complex, in my view the Federal Court Scale of Costs should apply.
Federal Circuit Court r.21.02 provides that in making an order for costs in a proceedings, the Court may set the amount of the costs, set the method by which the costs are to be calculated, refer the costs for taxation under Part 40 of the Federal Court of Australia Rules 2011 (Cth), or set a time for payment of the costs which may be before the proceeding is concluded. It would be very difficult in a complex matter such as the present one to be satisfied that an application of Schedule 1 would result in the respondents being properly compensated. In a matter such as this, I can only be satisfied that the respondents will be properly compensated if there is a taxation.
I see no reason why costs should be taxed on any basis other than a party and party basis. There is no special or unusual feature in the portion of the case that we are presently concerned with that would justify indemnity costs. I propose to make an order that costs will be on a party and party basis.
I make the orders to be found at the beginning of these reasons.
I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of Judge Simpson
Associate:
Date: 27 June 2014
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