Cann v Commonwealth Bank of Australia (No.6)
[2011] FMCA 912
•30 November 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CANN v COMMONWEALTH BANK OF AUSTRALIA (No.6) | [2011] FMCA 912 |
| BANKRUPTCY – Application for review of sequestration order made by Registrar – application dismissed – costs – indemnity costs. COSTS – Basis for award of costs in Federal Magistrates Court – costs in bankruptcy proceedings – whether indemnity costs can and ought to be awarded. |
| Bankruptcy Act 1966 (Cth), ss.30(1), 32, 41(6A) Federal Court of Australia Act 1976 (Cth), ss.5, 23, 43 Federal Court Rules (Cth), O.62, Schedule 2 Federal Court Rules2011 (Cth), O.40, Schedule 3 Federal Magistrates Act 1999 (Cth), ss.8, 15, 79, 81, 86 Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth), rr.1.03(2), 13.01 Federal Magistrates Court Rules 2001 (Cth), rr.13.03B, 21.02(1) and (2), 21.10(a), 44.15, Schedule 1 |
| Australian Guarantee Corporation Ltd v De Jager [1984] VR 483 Botany Municipal Council v Secretary, Department of Arts, Sport, Environment, Tourism & Territories (1992) 34 FCR 412 Davids Holdings Pty Ltd v Coles Myer Limited & Ors (1995) ATPR 41-383 D’Souza v Pattison [2007] FMCA 116 |
| Applicant: | GAVIN MICHAEL CANN |
| Respondent: | COMMONWEALTH BANK OF AUSTRALIA |
| File Number: | PEG 2 of 2011 |
| Judgment of: | Lucev FM |
| Hearing date: | On written submissions |
| Date of Last Submission: | 27 October 2011 |
| Delivered at: | Perth |
| Delivered on: | 30 November 2011 |
REPRESENTATION
| For the Applicant: | No written submissions filed |
| Solicitors for the Respondent: | Written submissions from Clayton Utz |
ORDERS
That each party file and serve written submissions as to the quantum only of indemnity costs, by 7 December 2011.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 2 of 2011
| GAVIN MICHAEL CANN |
Applicant
And
| COMMONWEALTH BANK OF AUSTRALIA |
Respondent
REASONS FOR JUDGMENT
Application
This is an application with respect to the costs of this matter in which judgment[1] was delivered on 11 October 2011. At that time the Court made an order that:
3. As to costs, the respondent to file and serve written submissions by 25 October 2011, and the applicant to file and serve written submissions by 8 November 2011, with costs to be determined by the Court on the written submissions.
[1] Cann v Commonwealth Bank of Australia (No. 5) [2011] FMCA 768 (“Cann (No. 5)”).
The respondent, the Commonwealth Bank of Australia,[2] filed written submissions. The applicant, Gavin Michael Cann,[3] did not file written submissions.
[2] “CBA”.
[3] “Mr Cann”.
The CBA obtained orders in Cann (No. 5):
a)dismissing an application for adjournment by Mr Cann; and
b)for the dismissal under r.13.03B(1) of the Federal Magistrates Court Rules 2001 (Cth)[4] of Mr Cann’s application for review of a sequestration order.[5]
[4] “FMC Rules”.
[5] Cann (No. 5) at paras.17-24 per Lucev FM (as to adjournment) and paras.39-51 per Lucev FM (as to non-compliance resulting in dismissal).
Issues
The primary issue which arises in these proceedings is on what basis costs might be awarded to CBA.
Basis for costs in this Court
Usual costs
The Court has a broad discretion with respect to the award of costs as set out in s.79 of the Federal Magistrates Act 1999 (Cth).[6] By reason of ss.81 and 86 of the FM Act the Court’s powers with respect to costs are affected by other legislation, and are also dealt with in the FMC Rules. Rule 21.02 of the FMC Rules provides that an application for costs may be made:
a)at any stage of the proceedings;
b)within 28 days after a final decree or order is made; or
c)within any further time allowed by the Court.[7]
[6] “FM Act”.
[7] FMC Rules, r.21.02(1).
The Court can:
a)set the amount of costs;
b)set the method by which costs are calculated;
c)refer the costs for taxation under the Federal Court Rules; or
d)set a time for payment of those costs.[8]
[8] FMC Rules, r.21.02(2).
The general rule is that costs follow the event, and that unless the Court otherwise orders, a party in general federal law proceedings is entitled to costs in a proceeding (other than bankruptcy,[9] or proceedings under the Fair Work Act 2009 (Cth),[10] or migration proceedings[11]) in accordance with Part 1 of Schedule 1 of the FMC Rules.[12]
[9] As to costs in bankruptcy proceedings generally see below at paras.9-10.
[10] FM Act, s.79(1).
[11] FMC Rules, r.44.15 and Schedule 1, Part 2.
[12] FMC Rules, r.21.10(a); see Pratt & Ors v Latta & Anor (No. 2) [2002] FMCA 43; Colan Products Pty Ltd v Luxon Pty Ltd & Anor (No. 2) [2002] FMCA 90 (“Colan (No. 2)”); Hinchliffe v University of Sydney (No. 2) [2004] FMCA 640; Pierson’s Pro-Health Pty Ltd & Ors v Silvex Nominees Pty Ltd & Anor (No. 3) [2010] FMCA 250 at para.43 per Lucev FM (“Pierson’s (No. 3)”).
The costs scale under the FMC Rules is an event based costs scale in respect of which a party receives a fixed sum in respect of specific events.[13] The fixed sum may be varied, up or down, by the Court in the exercise of its discretion.[14] Relevant to this application the Federal Magistrates Court costs scale provides for costs in respect of the following events:
a)Stage 1A: initiating or opposing an application which includes interim orders (other than procedural orders) up to the completion of the first court day;
b)Stage 2: interim or summary hearing – as a discrete event;
c)Stage 4: dispute resolution litigation intervention;
d)daily hearing fees for a short mention, half day hearing and full day hearing; and
e)disbursements, including court fees and other fees and payments, to the extent that they have been reasonable incurred, and photocopying per page.
[13] Colan (No. 2) at paras.5 and 7 per Raphael FM; Pierson’s (No. 3) at para.11 per Lucev FM.
[14] FM Act, s.79(3); Pierson’s (No. 3) at para.43 per Lucev FM: “Whilst there is a discretion to depart from the event-based scale, that is the exception rather than the norm”; Bunnag v Minister for Immigration & Anor (No. 2) [2008] FMCA 430 at paras.18-19 per Lucev FM (departure from fixed costs for migration proceedings – costs increased from $5,000 to $10,000).
Costs – bankruptcy
In relation to bankruptcy proceedings the Court has made particular provision with respect to costs in r.13.01 of the Federal Magistrates Court (Bankruptcy) Rules 2006[15] as follows:
[15] “FMC Bankruptcy Rules”.
(1) Subject to Division 13.2, a person who is entitled to costs in a proceeding to which the Bankruptcy Act applies is entitled to costs in accordance with Order 62 of the Federal Court Rules unless the Court otherwise orders.
(2) In making an order for costs, the Court may fix the amount of the costs.
(3) If the Court fixes the amount of the costs, Order 62 of the Federal Court Rules does not apply to a bill of costs submitted for the costs, except for the issue of a certificate of taxation.[16]
[16] The references to Order 62 of the Federal Court Rules (“FC Rules 1976”), which have been repealed, ought to be read as now referring to Order 40 of the Federal Court Rules 2011 (“FC Rules2011”).
The general practice of the Court to award costs in bankruptcy matters on the basis of the relevant Federal Court scale has diminished in frequency in recent years,[17] but it remains the primary basis for an award of costs in bankruptcy in this Court.
[17] Pierson’s (No. 3) at para.42 per Lucev FM.
Indemnity costs
The power to order indemnity costs in this Court arises from ss.8, 15 and 79 of the FM Act.[18]
[18] Which has statutory equivalents in ss.5, 23 and 43 of the Federal Court of Australia Act 1976 (Cth). See also Caboolture Park Shopping Centre Pty Ltd [in Liq] v White Industries (Qld) Pty Ltd (1993) 45 FCR 224 at 229-231 per Lee, Hill and Cooper JJ; (1993) 117 ALR 253 at 255-260 per Lee, Hill and Cooper JJ; Colgate-Palmolive Company & Anor v Cussens Pty Ltd (1993) 46 FCR 225 at 228 per Sheppard J (“Colgate-Palmolive”); Genovese v BGC Construction Pty Ltd (No. 2) [2007] FMCA 601 (“Genovese”).
The FMC Bankruptcy Rules provide that the FMC Rules apply “so far as they are not inconsistent with these [FMC Bankruptcy] Rules, to a proceeding to which the Bankruptcy Act 1966 (Cth)[19] applies.”[20] The FMC Rules can apply to the present proceedings so far as they are not inconsistent with FMC Bankruptcy Rules, because the indemnity costs application is a “proceeding”, and a proceeding to which the Bankruptcy Act applies and in respect of which costs orders may be made by the Court by reason of s.32 of the Bankruptcy Act (when read in conjunction with the FM Act and FMC Rules).[21]
[19] “Bankruptcy Act”.
[20] FMC Bankruptcy Rules 1.03(2).
[21] Genovese at para.42 per Lucev FM.
In determining whether to award indemnity costs the Court has a very wide discretion, to be exercised judicially.[22] What is an appropriate costs or indemnity costs order depends on the circumstances of the case.[23] The normal practice, not to be lightly departed from, is to provide for costs to be on a party – party basis.[24] There are however certain issues to which the Court will give consideration, and weigh, when determining whether to make an indemnity costs order, and the extent of any such order. The issues must establish special or unusual circumstances warranting an indemnity costs order.[25] Those issues include:
[22] PCRZ Investments Pty Ltd v National Golf Holdings [2002] VSCA 24 at para 32 per Chernov JA (“PCRZ Investments”) applied in D’Souza v Pattison [2007] FMCA 116 at para 24 per McInnis FM; Bhagat v Global Custodians Ltd [2002] FCA 223 at para 60 per O’Loughlin, Whitlam and Marshall JJ (“Bhagat”); Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd& Ors (1988) 81 ALR 397 at 401 per Woodward J (“Fountain Selected Meats”).
[23] PCRZ Investments at para 32 per Chernov JA; Colgate-Palmolive at 227 per Sheppard J.
[24] Colgate-Palmolive at 230 and 233 per Sheppard J; Davids Holdings Pty Ltd v Coles Myer Limited & Ors (1995) ATPR 41-383 at 40, 298 per Drummond J (“Davids Holdings”).
[25] Fountain Selected Meats at 400 per Woodward J; Colgate-Palmolive at 233 per Sheppard J; Davids Holdings at 40, 298 per Drummond J.
a)whether a party should have known that there was no prospect of success in the case;[26]
[26] Fountain Selected Meats at 401 per Woodward J; Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (unreported, Federal Court of Australia, 3 May 1991) at 8 per French J. (“Tetijo Holdings”)
b)where a party alleges fraud or forgery, knowing the accusation to be false, or irrelevant to the issues;[27]
[27] Australian Guarantee Corporation Ltd v De Jager [1984] VR 483 (“De Jager”); Fountain Selected Meats at 401 per Woodward J.
c)where a party precipitately punctuates proceedings by resiling from a previously adhered to view;[28]
[28] Bass Coast Shire Council v King [1977] 2 VR 5 at 28-30 per Winneke P.
d)where a party acts in a high handed manner;[29]
[29] De Jager at 502 per Tadgell J; Fountain Selected Meats at 401 per Woodward J.
e)whether the party against whom indemnity costs is sought is a self-represented litigant, and whether the self-represented litigant ought escape the consequences of indemnity costs;[30]
[30] Bhagat at para 57 per O’Loughlin, Whitlam and Marshall JJ.
f)where a party proceeds “vexatiously” that is “without sufficient grounds for the purpose of causing trouble or annoyance”;[31]
[31] Fountain Selected Meats at 400 per Woodward J.
g)where a party proceeds for no good purpose at all due to inertia and carelessness;[32]
h)where a party persists in the making of allegations which ought not to have been made, or in undue prolongation of groundless contentions;[33]
i)where a party’s conduct causes loss of time to the Court, and to other parties;[34]
j)where a party imprudently refuses an offer to compromise;[35]
k)whether the award of indemnity costs is sought against a contemnor;[36] and
l)having regard to the objects of:
i)encouraging savings of private costs and avoidance of inherent risks, delays and uncertainties of litigation;
ii)saving public cost necessarily incurred in litigation which events demonstrate to have been unnecessary; and
iii)indemnifying one party where the real cause and occasion of the litigation is the attitude adopted by the other party.[37]
[32] Fountain Selected Meats at 400 per Woodward J.
[33] Colgate-Palmolive at 233 per Sheppard J.
[34] Ugly Tribe Co Pty Ltd v Sikola & Ors [2001] VSC 189 at para 7 per Harper J.
[35] Colgate-Palmolive at 233-234 per Sheppard J (and cases there cited).
[36] Colgate-Palmolive at 234 per Sheppard J.
[37] Rouse v Shepherd [No. 2] (1994) 35 NSWLR 277 at 279 and 281 per Badgery-Parker J.
The bases for the exercise of the discretion in relation to indemnity costs are not closed. Nor are they so circumscribed that an indemnity costs order “may only be made against an ethically or morally delinquent party”.[38] Other elements of litigious misconduct may be considered in the exercise of the Court’s discretion.[39]
[38] Botany Municipal Council v Secretary, Department of Arts, Sport, Environment, Tourism & Territories (1992) 34 FCR 412 at 415 per Gummow J.
[39] Tetijo Holdings at 8 per French J.
CBA’s submissions
CBA submits that:
a)Mr Cann’s application for review was dismissed under r.13.03B of the FMC Rules which gives the Court discretion to make any order it considers just;[40]
[40] FMC Rules, r.13.03B(6).
b)an award of costs generally follows the event;
c)the usual order as to costs is that an unsuccessful party will pay the party and party costs of the proceeding to the successful party;
d)a court may award indemnity costs where the peculiar facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis;
e)courts may award indemnity costs against unrepresented litigants;
f)an award of indemnity costs is appropriate where the conduct of unrepresented litigants results in the hearing being prolonged and wastage of court time;
g)non-compliance with court orders may be a basis on which indemnity costs can be awarded; and
h)in the present proceedings:
i)Mr Cann’s failure to comply with orders of the Court, including the filing of documents by the specified date, resulted in the proceedings being dismissed; and
ii)CBA’s costs were unnecessarily increased as a result of the conduct of Mr Cann in the proceedings, including:
A.that the application for review of the sequestration order made by the Registrar on 21 December 2010 was dismissed on 11 October 2011 due to Mr Cann’s failure to comply with Court orders (including the failure to file evidence);
B.Mr Cann was granted three opportunities, by way of extension of time, to comply with Court orders between 4 March 2011 and 19 September 2011; and
C.Mr Cann failed to attend Court on 21 April 2011.
With respect to the basis for recovering costs the CBA submits that:
a)it is entitled to recover its costs in the proceedings as calculated in accordance with Schedule 2 of the FC Rules 1976 and Schedule 3 of the FC Rules2011 and that those rules set out the rates which can be charged on an item by item basis;
b)Schedule 1 of the FMC Rules provides a maximum amount that can be claimed, which in this matter is $5,123, calculated on the basis of $2,500 for a daily hearing fee plus disbursements, and $2,623 for work performed attending dispute resolution litigation intervention (that is, court ordered mediation); and
c)the calculation of costs under the FC Rules1976 and FC Rules 2011 contained in a draft bill of costs prepared by the CBA is in the amount of $10,079.88.
Mr Cann’s submissions
Mr Cann did not file or otherwise make any submissions as to costs.
Facts generally relevant to indemnity costs issues
In relation to the facts relevant to the indemnity costs issues it is appropriate to reiterate why it is that the Court determined to exercise its discretion to dismiss Mr Cann’s application under r.13.03B(1) of the FMC Rules. In Cann (No. 5) the Court said:
42. The question therefore arises as to whether the discretion ought to be exercised to dismiss the application. In determining whether and how to exercise the discretion the Court has had regard to a number of factors set out hereunder.
43. First, there is no basis for impugning the District Court default judgment which underpins the sequestration order. On the evidence as it presently stands the default judgment has not been set aside, and there is no evidence before this Court of an application to set it aside, or of any approval of the Trustee to allow Mr Cann to make an application to set it aside.
44. Second, whilst it was no doubt open to the Registrar to find that the medical certificate, in its terms, provided no basis for the adjournment sought on 21 December 2010, because the medical certificate relates only to 20 December 2010, it is now irrelevant. That is because on a review application this Court must ordinarily consider afresh whether a sequestration order ought to issue.
45. Third, despite ample opportunity having been provided to Mr Cann to do so, there is:
a) no evidence that any payments have been made from the Trust; and
b) no application, or amended application for review, or otherwise, for the sequestration order to be annulled on the basis that Mr Cann is solvent on account of his access to the Trust funds, or any other funds.
46. Fourth, given the opportunity afforded to Mr Cann to:
a) get his application for review in proper order; and
b) serve creditors with proper notice of the review, and file and serve an affidavit of compliance, which has not been done,
there is arguably no unfair prejudice to Mr Cann if the application were to be dismissed on the basis of default because any prejudice would be a consequence of circumstances of Mr Cann’s own making.
47. Fifth, there is ongoing prejudice to the CBA by reason of the CBA having to deal with these proceedings, with the attendant costs and inconvenience, in circumstances where CBA have already obtained:
a) default judgment in the District Court; and
b) a sequestration order from a Registrar of this Court,
and where:
c) the evidence does not indicate that there is presently an application to set aside the default judgment, or any prospect of it being set aside; and
d) Mr Cann has not complied with this Court’s Orders (as detailed below) so as to enable issue to properly be joined with the CBA, and other creditors, if there are any.
48. Sixth, Mr Cann’s non-compliance with the Court’s Orders, and specifically:
a) Order 1(b) of the Court’s 7 February 2011 Orders, requiring that Mr Cann give notice to all creditors, as required by r.7.06 of the FMC (Bankruptcy) Rules, by 21 February 2011;
b) Order 2 of the Court’s 7 February 2011 Orders, requiring that Mr Cann file and serve an affidavit of compliance with Order 1 by 28 February 2011;
c) Order 1 of the Court’s 4 March 2011 Orders, which extended the time for compliance with Order 2 of the Court’s 7 February 2011 Orders to 18 March 2011;
d) Orders 1 and 3 of the Court’s 21 April 2011 Orders, requiring Mr Cann to file and serve any amended application for review and any further affidavits by 20 May 2011 and file and serve any affidavit of compliance by 3 June 2011;
e) Orders 1 and 3 of the Court’s 5 September 2011 Orders, requiring Mr Cann to file and serve any amended application for review and any further affidavits by 12 September 2011 and file and serve any an affidavit of compliance by 26 September 2011.
49. Seventh, the paucity of evidence put on by Mr Cann, despite his being giving ample opportunity to amend his application and to put on further evidence, provides no basis on which the Court could conclude that there is even an arguable case for setting aside the default judgment, or that Mr Cann is solvent.
50. Finally, the Court notes that the Trustee’s report to the Court indicates that no Statement of Affairs has been filed by Mr Cann.
51. There is no doubt that Mr Cann is in default for the purposes of r.13.03A(1) of the FMC Rules as a consequence of his non-compliance with the Court’s various orders over an extended period of time. In the Court’s view, the matters set out above provide, in the context of the non-compliance with the Court’s various orders over an extended period of time, a compelling case for the exercise of the discretion under r.13.03B(1) of the FMC Rules to dismiss the Review Application.[41]
[41] Cann (No. 5) at paras.42-51 per Lucev FM.
Consideration – what costs ought to be awarded
The CBA’s draft bill of costs under FC Rules 1976 and FC Rules 2011
The CBA’s draft bill of costs based on the FC Rules 1976 and FC Rules2011 in the amount of $10,079.88 is correctly drawn in the Court’s view, and requires no further comment as to its quantum.
Costs under the FMC Rules
Had the CBA claimed costs under Part 1 of Schedule 1 of the FMC Rules based on the relevant events it might, at least, have claimed costs as follows:
Date
Event
Amount/Amounts
7/2/2011
First directions hearing on first court day for opposing application including interim orders and daily hearing fee for short mention.
$3353 (Stage 1A - $3128 for directions hearing; $225 for daily hearing fee for short mention).
4/3/2011
Adjourned directions hearing.
$225 (daily hearing fee short mention).
22/3/2011
Adjourned directions hearing and interim oral hearing of pro bono assistance application by Mr Cann as a discrete event. Dismissed on 12/4/2011: Cann v Commonwealth Bank of Australia (No. 2) [2011] FMCA 242.
$1784 (Stage 2 - $1559 for interim application; $225 for daily hearing fee for short mention).
12/4/2011
Hearing of two further interim applications by Mr Cann as discrete events. Each interim application dismissed: Cann v Commonwealth Bank of Australia [2011] FMCA 221.
$0 (Stage 2 - costs previously awarded – see orders made on 12 April 2011).
21/4/2011
Application in a case by Mr Cann for adjournment. Dismissed on 6/5/2011: Cann v Commonwealth Bank of Australia (No. 3) [2011] FMCA 303.
$1784 (Stage 2 - $1559 for interim oral application; $225 for daily hearing fee for short mention).
8/7/2011 and 10/8/2011
Mediation/Assisted dispute resolution.
$2623 (Stage 4)
23/8/2011
Directions hearing.
$225 (short mention daily hearing fee).
5/9/2011
Application in a case by Mr Cann for adjournment of hearing. Application in a case dismissed: Cann v Commonwealth Bank of Australia (No. 4) [2011] FMCA 698.
$1784 (Stage 2 - $1559 for application in a case); $225 (daily hearing fee short mention).
30/9/2011
Application in a case by Mr Cann for adjournment. Oral application by CBA for summary dismissal.
$1559 (Stage 2 – Mr Cann’s application in a case).
$1559 (Stage 2 – CBA’s application in a case).
$936 (daily hearing fee – only one hearing fee on two applications in a case heard together).Total
$15,832
The amounts set out above do not include provision for disbursements and photocopying.
CBA’s lawyers misunderstand basis for costs awards
Had the CBA claimed costs on the usual basis for costs in general federal law proceedings in this matter, it may have recovered a sum greater than that prescribed for the usual costs in a bankruptcy proceeding in this Court. It is apparent however from the submissions made on behalf of the CBA that its lawyers have misunderstood the basis upon which costs might usually be claimed in proceedings in this Court. That misunderstanding is at two levels. First, the claim for costs on an indemnity basis on the basis of the FC Rules1976 and FC Rules 2011 is in fact a claim for the costs that would usually be awarded in bankruptcy proceedings in this Court. Second, the submission that this Court would only award $5123 in costs for this matter if assessed under the FMC Rules is incorrect because it misapprehends the nature and scope of the events based scale of costs which may, as set out above, have resulted in costs of at least $15,832 being awarded if the matter were assessed under Part 1 of Schedule 1 of the FMC Rules.
The CBA has thus claimed as indemnity costs the usual costs awarded in bankruptcy proceedings in this Court. Also, because of its misunderstanding as to the costs which might otherwise have been claimed in general federal law proceedings in this Court, it has miscalculated as to an amount otherwise payable[42] which it might be arguable provides an appropriate basis for the calculation of, or at least a guide as to the setting of, indemnity costs, if it is appropriate for the Court to order indemnity costs in this matter.
[42] FMC Bankruptcy Rules, r.13.01(2); FM Act, s.79(3); Bankruptcy Act, s.32.
Is an indemnity costs order appropriate?
Is it appropriate to award indemnity costs in this matter?
In determining whether to award indemnity costs, the Court has had regard to the totality of the course of these proceedings, but also, in particular, to the following factors:
a)the District Court litigation in relation to the judgment debt and associated matters which shows that Mr Cann was not a novice self-represented litigant;
b)allegations made by Mr Cann which ought not to have been made, particularly in relation to the asserted basis for impugning the District Court default judgment and for having that judgment set aside, and the fact that those allegations unduly prolonged the proceedings in this Court causing a loss of time for the Court and the CBA, and increased costs generally;
c)Mr Cann’s serial non-compliance with the orders of this Court;[43]
d)Mr Cann’s making of unnecessary and flimsily based applications for adjournment on a number of occasions, which were ultimately unsuccessful, and which unduly prolonged proceedings, causing a loss of time and increased costs;
e)Mr Cann’s overall conduct of the proceedings, by way of both applications made and his conduct in Court, which caused delay in the resolution of the application for review by several months, for no particular or good purpose, and which sometimes bordered on the vexatious; and
f)the significantly increased costs of the proceedings arising from Mr Cann’s conduct of the proceedings, both to CBA and to the public purse.
[43] See para.18 above.
In the Court’s view the totality of the above circumstances establishes special and unusual circumstances, which make it appropriate that the CBA be awarded indemnity costs.
Indemnity costs – but in what amount?
CBA’s intention was to claim indemnity costs. Indemnity costs in this matter might be expected to be more than the costs which would usually be awarded by this Court in a bankruptcy proceeding, which was in fact the amount claimed by CBA as a consequence of its lawyer’s mistake.
The difficulty which now arises is that the CBA has claimed $10,079.88 which it perceives to be indemnity costs, but which are in fact the usual costs for bankruptcy proceedings in this Court. Neither party has argued the matter on the basis of an award of costs in excess of CBA’s claim for $10,079.88. Although Mr Cann did not make any submissions as to costs, if the Court is to award indemnity costs in an amount in excess of that which has been claimed by the CBA it may be that Mr Cann would wish to make some submission as to any potentially increased quantum of indemnity costs. effect
Both parties are entitled to procedural fairness with respect to the amount of costs to be awarded by this Court.[44] Further, the CBA ought not be prejudiced by reason of its lawyer’s mistake.[45] Procedural fairness attaches only to the quantum of indemnity costs to be awarded, not to the awarding of indemnity costs, which was the subject of the submissions from the CBA to which Mr Cann did not respond. Procedural fairness dictates that where the Court is contemplating awarding an amount significantly in excess of that claimed by the party entitled to costs, and on a different basis to that claimed by the party entitled to costs, that both parties be entitled to make further submissions concerning the quantum of indemnity costs.
[44] Skipworth v Western Australia (No. 2) (2008) 218 FLR 16 at 32 per Lucev FM; [2008] FMCA 544 at para.67 per Lucev FM (and cases there cited).
[45] Although made in respect of applications to set aside orders and for extension of time respectively, the general principles as to the effect of a lawyer’s mistake are set out in Du v Minister for Immigration & Anor (No. 2) [2011] FMCA 806 at para.15 per Lucev FM (and cases there cited) and TWU v School Bus Contractors Pty Ltd (2011) 201 IR 327 at 343-344 per Lucev FM; [2011] FMCA 28 at paras.58-67 per Lucev FM (and cases there cited).
Conclusion and order
The Court has concluded that:
a)CBA is entitled to its costs in this matter on an indemnity basis; and
b)procedural fairness requires that each party be given the opportunity to file and serve further submissions as to the quantum of indemnity costs.
There will therefore be an order to provide for the filing and serving by both parties of further submissions, limited to the issue of the quantum only of indemnity costs. Those submissions are to be filed and served by 7 December 2011. Thereafter, the Court will determine the quantum of the indemnity costs to be awarded to CBA.
I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of Lucev FM
Associate:
Date: 30 November 2011
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