FEDERAL COURT OF AUSTRALIA
Fewin Pty Ltd v Burke (No 3) [2017] FCA 693
File number: NSD 1222 of 2015 Judge: MARKOVIC J Date of judgment: 23 June 2017 Catchwords: COSTS – applications for lump sum costs orders – where entitlement to costs on an indemnity basis – where no evidence that costs claimed were unreasonable – whether to exercise discretion to make orders for lump sum costs – where orders made by consent for costs to be paid “as agreed or taxed” – whether lump sum costs order can be made in circumstances where costs to be paid “as agreed or taxed” – quantification of lump sum costs orders – applications allowed Legislation: Federal Court of Australia Act 1976 (Cth) s 43
Federal Court Rules 2011 (Cth) r 40.02
Cases cited: Bayley & Associates Pty Ltd v DBR Australia Pty Ltd [2014] FCA 346
Bitek Pty Ltd v IConnect Pty Ltd [2012] FCA 506
Bobb v Wombat Securities Pty Ltd (No 2) [2013] NSWSC 863
Clipsal Australia Pty Ltd v Clipso Electrical Pty Ltd [2016] FCA 37
Dunstan v Human Rights and Equal Opportunity Commission (No 3) [2006] FCA 916
eInduct Systems Pty Ltd v 3D Safety Services Pty Ltd (2015) 90 NSWLR 451
Hancock v Rinehart (Lump sum costs) [2015] NSWSC 1640
Hudson v Sigalla [2016] FCA 1204
Keen v Telstra Corporation Limited (No 2) [2006] FCA 930
Short v Crawley (No 45) [2013] NSWSC 1541
Su v Australian Fisheries Management Authority (No 3) [2008] FCA 2018
Date of hearing: 30 March 2017 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: General and Personal Insolvency Category: Catchwords Number of paragraphs: 80 Counsel for the Applicants: Mr A P Cheshire SC Solicitor for the Applicants: Comino Prassas Counsel for the First and Third Respondents: Ms M Castle Solicitor for the Third Respondent: Gillis Delaney Lawyers Counsel for the Second Respondent and the Inspector-General in Bankruptcy: Mr M J Heath Solicitor for the Second Respondent and the Inspector-General in Bankruptcy: Australian Government Solicitor ORDERS
NSD 1222 of 2015 BETWEEN: FEWIN PTY LTD ABN 64 051 132 453
First Applicant
RONALD MICHAEL COSHOTT
Second Applicant
LJILJANA COSHOTT (and another named in the Schedule)
Third Applicant
AND: JOHN BURKE
First Respondent
OFFICIAL TRUSTEE IN BANKRUPTCY
Second Respondent
MAXWELL WILLIAM PRENTICE
Third Respondent
JUDGE:
MARKOVIC J
DATE OF ORDER:
23 JUNE 2017
THE COURT ORDERS THAT:
1.Pursuant to rule 40.02(b) of the Federal Court Rules 2011 (Cth) (Rules), the costs of the first respondent payable by the applicants pursuant to Order 2 made on 13 December 2016 be fixed in the sum of $84,280.21 inclusive of GST.
2.Pursuant to rule 40.02(b) of the Rules, the costs of the second respondent payable by the applicants pursuant to Order 2 made on 12 December 2016 be fixed in the sum of $63,865.
3.Pursuant to rule 40.02(b) of the Rules, the costs of the third respondent payable by the applicants pursuant to Order 2 made on 13 December…
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- Case
- [2017] FCA 693
- Decision Date
CaseChat Overview and Summary
The central legal issue was whether the court should exercise its discretion to make lump sum costs orders, despite prior indemnity costs orders, in light of the applicants' conduct during the litigation. The applicants argued that the delay in applying for lump sum costs and the overlap between respondents' claims should prevent the making of such orders. The respondents, on the other hand, submitted that the applicants' conduct warranted lump sum costs orders to bring finality to the litigation and avoid further delays and expenses. The court considered that the applicants' conduct, including unnecessary delays and the failure to specify relied-upon material, justified the exercise of the court's discretion to make lump sum costs orders. The court held that the primary purpose of such orders was to bring finality to the litigation efficiently, and this was particularly important given the impact on the administration of an estate. Accordingly, the court found that lump sum costs orders were appropriate and proceeded to quantify these orders.
The court allowed the applications for lump sum costs orders, finding that the circumstances warranted such orders to avoid further delay and expense. The court applied the same reduction to the Inspector-General's costs for the costs of the application itself, fixing the total costs at $21,635. The court also fixed the costs payable by the applicants to the other respondents in amounts totalling $337,033.21. The court made orders fixing these costs pursuant to the Federal Court Rules, ensuring that the applicants pay the respondents' costs in the specified amounts.
Orders
Orders of the court
1. Pursuant to rule 40.02(b) of the Federal Court Rules 2011 (Cth) (Rules), the costs of the first respondent payable by the applicants pursuant to Order 2 made on 13 December 2016 be fixed in the sum of $84,280.21 inclusive of GST.
2. Pursuant to rule 40.02(b) of the Rules, the costs of the second respondent payable by the applicants pursuant to Order 2 made on 12 December 2016 be fixed in the sum of $63,865.
3. Pursuant to rule 40.02(b) of the Rules, the costs of the third respondent payable by the applicants pursuant to Order 2 made on 13 December 2016 be fixed in the sum of $189,888.
4. Pursuant to rule 40.02(b) of the Rules, the costs of the Inspector-General in Bankruptcy payable by the applicants pursuant to Order 4 made on 12 May 2016 and Order 1 made on 23 June 2016 be fixed in the sum of $21,635.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
In relation to the claim by the Inspector-General the applicants submitted that costs orders in her favour had been made in May 2016 and that there had been a significant delay before an application was made for a lump sum costs order in December 2016. The applicants also submitted that an issue of overlap arose as between the costs claimed by the Official Trustee and the Inspector-General. The applicants contended that there was a further complication insofar as the Inspector-General had the benefit of two costs orders, with one order being made on a party-and-party basis and the other on an indemnity basis, and that where orders are made on two different bases then the issue of accurate costs apportionment between the various applications is more important.CONSIDERATIONShould orders for lump sum costs be made? In my opinion it is appropriate that lump sum costs orders be made. My reasons for reaching this conclusion follow. I will address the issues of general principle first. As was observed in Clipsal Australia at [9] the circumstances in which an order for lump sum costs may be made are not closed. The power to make such an order can be exercised whenever the circumstances warrant it. The making of such an order is not limited to large or complex cases, nor to simple cases. Relevantly, the circumstances in which such an order can be made include the avoidance of the delay, expense, inconvenience and aggravation arising out of a taxation. The purpose of making such an order is not punitive. Rather, it is made in order to bring finality to the litigation in a way that is efficient for the parties both in terms of the time and cost they might otherwise expend in the taxation process. The need to finalise the proceeding in that way may be viewed in the context of the proceeding as a whole. The applicants commenced this proceeding in October 2015 seeking relief on one basis, but then abandoned those claims, repleading their case at a time when the respondents had already been put to the trouble of preparing for a hearing. Leading up to the hearing there were a number of aspects of the way in which the applicants conducted the proceeding which caused the respondents to unnecessarily expend time and resources, including serving voluminous material but failing to specify what parts of that material would be relied on against each respondent at trial; failing to comply with aspects of the Court’s orders; and late service of material to be relied on at the hearing. Ultimately, the amended claim was abandoned at the rescheduled hearing. The respondents have been put to the trouble, time and expense of preparing for a hearing on two occasions only to find, on both occasions, that the claims were, or were effectively, abandoned. They ought not now be subjected to the inconvenience of a potentially protracted taxation process when the issue of costs can be dealt with on a final basis in an efficient manner. This is particularly so in circumstances where one of the respondents, Mr Prentice, is the trustee of Robert Coshott’s estate. The administration of that estate ought not be delayed.