Goulding v Simonds Homes Victoria Pty Ltd (No 3)
[2021] FCCA 1790
•3 August 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Goulding v Simonds Homes Victoria Pty Ltd (No 3) [2021] FCCA 1790
File number(s): MLG 1941 of 2018 Judgment of: JUDGE MCNAB Date of judgment: 3 August 2021 Catchwords: INDUSTRIAL LAW – Fair Work Act 2009 (Cth) – costs – respondent seeks costs on an indemnity basis, to be taxed in default of agreement – in the alternative the respondent seeks costs on a party/party basis or to be fixed by the court – multiple Calderbank offers made to the applicant – Calderbank offers refused – repudiation of Calderbank offers was unreasonable – costs awarded on party/party basis. Legislation: Fair Work Act 2009 (Cth) s 570.
Federal Circuit Court Rules 2001 (Cth) r 21.02.
Federal Court of Australia Act1976 (Cth) s 43.
Federal Court Rules 2011 (Cth) r 25.05.
Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 26.03.
Cases cited: Abdi v Equitable Financial Solutions Pty Ltd & Anor [2020] FCCA 2521
Bashour v Australia and New Zealand Banking Group Limited [2017] FCA 183
Beach Petroleum NL v Johnson (No. 2) (1995) 57 FCR 119
Calderbank v Calderbank [1975] 3 All ER 333
Edwards Madigan Torzillo Briggs Pty Ltd v Gloria Stack & Ors [2003] NSWCA 302
Goulding v Simonds Homes Victoria Pty Ltd [2020] FCCA 2457
Goulding v Simonds Homes Victoria Pty Ltd (No. 2) [2021] FCCA 1449
Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority(No. 2) (2005) 13 VR 435
Idoport Pty Ltd v the National Australia Bank Ltd [2007] NSWSC 23
McDonald v Parnell Laboratories (Aust) (No 2) [2007] FCA 2086
Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20
Ryan v Primesafe [2015] FCA 8
Shea v EnergyAustralia Services Pty Ltd (No 2) [2015] FCAFC 14
Thompson & Finch & Ors [2020] FamCAFC 230
Umoona Tjutagku Health Service Aboriginal Corporation v Walsh [2019] FCAFC 32
Young v Young [1998] 2 FLR 1131
Number of paragraphs: 35 Date of last submission/s: 27 July 2021 Date of hearing: On the Papers Place: Melbourne Counsel for the Applicant: Dr M Wolff Solicitor for the Applicant: Adams Maguire Sier Counsel for the Respondent: Mr N Harrington Solicitor for the Respondent Minter Ellison ORDERS
MLG 1941 of 2018 BETWEEN: JOHN GOULDING
Applicant
AND: SIMONDS HOMES VICTORIA PTY LTD
Respondent
ORDER MADE BY:
JUDGE MCNAB
DATE OF ORDER:
3 AUGUST 2021
THE COURT ORDERS THAT:
1.The Applicant pay the Respondent’s costs and disbursements incurred in, and of, the proceedings, on a party/party basis in the period from 8 February 2020 up to, and including, the costs of the final hearing in these proceedings.
2.
In default of agreement between the parties as to the amount of those costs within
28 days of the date of these orders, the proceedings be referred to a Registrar or
Senior Registrar of the Federal Circuit Court of Australia for the determination of fixing a lump sum of costs, pursuant to Rule 21.02 of the Federal Circuit Court Rules 2001 (Cth).
REASONS FOR JUDGMENT
Judge McNab:
INTRODUCTION
On 2 July 2021, the Court entered judgment under the media neutral citation ‘Goulding v Simonds Homes Victoria Pty Ltd [2021] FCCA 1449’. In doing so, the Court made orders in favour of the Respondent by dismissing the Applicant’s application filed on 5 July 2018 (and amended on 18 March 2019). Those reasons should be read in conjunction with these reasons. Further orders were made inviting the parties to make an application for costs as follows:
[…]
2. Any application by the Respondent for costs be filed within 14 days of the date of these orders and be supported by submissions limited to two (2) A4 pages.
3. Any submissions in response to any application for costs be filed within 28 days of the date of these orders and be limited to two (2) A4 pages.
4. The questions of costs be determined on the papers.
On 16 July 2021, the Respondent filed an application for costs, supported by an affidavit of
Ms Alishia Prpich (a solicitor from the firm representing the Respondent) and submissions as to costs. The Applicant filed submissions in reply on 27 July 2021.
The Court must now determine the question of costs on the papers.
THE COURT’S JURISDICTION AS TO COSTS IN FAIR WORK ACT 2009 (CTH) MATTERS
Rule 21.02 of the Federal Circuit Court Rules 2001 (Cth) (“the FCC Rules”) provides as follows:
(1) An application for an order for costs may be made:
(a) at any stage in a proceeding; or
(b) within 28 days after a final decree or order is made; or
(c) within any further time allowed by the Court.
(2) In making an order for costs in a proceeding, the Court may:
(a) set the amount of the costs; or
(b) set the method by which the costs are to be calculated; or
(c) refer the costs for taxation under Part 40 of the Federal Court Rules or under Chapter 19 of the Family Law Rules; or
(d) set a time for payment of the costs, which may be before the proceeding is concluded.
In respect of matters made pursuant to the Fair Work Act 2009 (Cth) (“the FW Act”), the Court’s power to make orders as to costs is subject to the operation of s570 of the FW Act, which states:
(1) A party to proceedings (including an appeal) in a court (including a court of a State or Territory) exercising jurisdiction under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection(2) or section 569.
(2) The party may be ordered to pay the costs only if:
(a) the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or
(b) the court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs; or
(c) the court is satisfied of both of the following:
(i) the party unreasonably refused to participate in a matter before FWA;
(ii) the matter arose from the same facts as the proceedings.
(Note removed)
THE RESPONDENT’S SUBMISSIONS
By way of its application for costs, the Respondent seeks orders as follows:
1. Pursuant to s.570(2)(b) of the Fair Work Act 2009 (Cth) and Part 21, rule 21.02 of the Federal Circuit Court Rules 2001, the Applicant pay, within 28 days, the Respondent's costs and disbursements properly incurred in, and of, the proceeding to be taxed, in default of agreement, on an indemnity basis, in the period from 8 February 2020 up to, and including, costs of the trial in this proceeding.
2. Alternatively to 1 herein, the Applicant pay, within 28 days, the Respondent's costs and disbursements properly incurred in, and of, the proceeding to be taxed, in default of agreement, on a party/party basis in the period from 8 February 2020 up to, and including, costs of the trial in this proceeding.
3. Alternatively to 1 and 2 herein, the Applicant pay within 28 days the Respondent's costs and disbursements reasonably incurred, fixed in the amount of $190,000 of the total professional fees and disbursements incurred of $275,795 (incl GST) since 8 February 2020.
At [2] of its submissions filed in support of the application for costs, the Respondent submits that the Court’s power to award costs in this matter is enlivened by s570(2)(b) of the FW Act. The Respondent submits that the Applicant rejected three separate offers of compromise, and in doing engaged in an ‘unreasonable act or omission’, causing the Respondent to incur its legal costs in defending the substantial proceedings. In the context of the substantial proceedings, whereby they were commenced on 5 July 2018, the matter coming before the Court on 14 April 2020 for an interim defended hearing, and ultimately coming before the Court on 22 February 2021 for final hearing, the three offers of compromise made were as follows:
(1)on 31 January 2020, by way of a letter sent to the Applicant, the Respondent made a Calderbank offer (see Calderbank v Calderbank
[1975] 3 All ER 333 (“Calderbank”)) to the Applicant in the sum of $250,000 (gross) (with no deduction for income tax) to settle the entire proceedings (“the First Offer”): see Ms Prpich’s affidavit, exhibit
AMP-1. The rationale for that offer was set out in a letter enclosing the offer, and the offer was to expire on 7 February 2020. That offer was rejected without explanation as to why it was rejected, by a letter sent to the Respondent on 7 February 2020: see
Ms Prpich’s affidavit, exhibit AMP-2. No counter offer was made by the Applicant;
(2)
on 25 September 2020, by way of a letter sent to the Applicant, the Respondent made a second Calderbank offer to the Applicant in the sum of $50,000 to settle the entire proceedings (“the Second Offer”): see Ms Prpich’s affidavit, exhibit AMP-6. That offer was set to expire on 2 October 2020. By way of a letter sent to the Respondent on
6 October 2020, the Applicant rejected the offer and asserted he was “…proceeding to trial and will be seeking his proper entitlements as an employee of the Respondent who was dismissed without cause.” The Applicant’s letter did not engage with the contents of the offer and made no counter offer: see Ms Prpich’s affidavit, exhibit AMP-7; and
(3)
at approximately 5.30pm on Friday, 19 February 2021, the Respondent sent a letter to the Applicant offering to settle the entire proceedings upon the Applicant filing a notice of discontinuance, each party walking away from the matter and each party bearing their own costs (“the Third Offer”): see Ms Prpich’s affidavit, exhibit AMP-8.
That offer was to expire at 9.00am on Monday, 22 February 2021, prior to the commencement of the final hearing. The Respondent says that no response was received from the Applicant in respect of the Third Offer.
I note that, perhaps confusingly, in Ms Prpich’s affidavit at [6], Ms Prpich refers to a letter sent to the Applicant on 23 March 2020 (“the March 2020 letter”), as follows:
6. […] the Respondent sent a letter to the Applicant’s solicitors which it placed the Applicant on notice that if he persisted with his foreshadowed application for leave to file the proposed Further Amended Statement of Claim, the Respondent would seek an order for costs against the Applicant pursuant to s.570(2) of the Fair Work Act 2009 (Cth) (March 2020 Offer).
The March 2020 letter did not constitute an offer of compromise and will not be taken into account as such.
The Respondent refers to various authorities in support of the general principles that the discretion to award costs pursuant to s570 of the FW Act should be exercised cautiously
(see, for example, Ryan v Primesafe [2015] FCA 8 at [64]) and that it is accepted that a failure to accept a reasonable offer of compromise may constitute an ‘unreasonable act’ for the purposes of s570(2) of the FW Act: see, for example, Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20 (per Tracey, Gilmore, Jagot & Beach JJ with whom White J agreed).The Respondent submits at [18] of its submissions that:
18. From the outset, Simonds contends this was a proceeding in which, from the outset:
a) there were very few contested facts, especially in relation to the manner in which the services relationship was conceived and advanced by Goulding himself;
b) Goulding knew, at all relevant times, the tax and other advantages that he had obtained from the very nature of the relationship he had proposed and facilitated; and
c) prior to the issue of proceedings in July 2018, nearly 6 years after the relationship had ended, there was no assertion as to any employment relationship.
In that context, the Respondent submits at [21] – [27] that the First Offer was reasonable for the following reasons:
(1)the underlying core facts were not in dispute, and the Applicant knew (as an registered Accountant) that he had put in place a tripartite labour supply arrangement with the Respondent, with his then partner as the Director and sole shareholder of the interposed corporate entity;
(2)the offer “accommodated the possibility of the Applicant being successful in his substantial claim with the Court”: see McDonald v Parnell Laboratories (Aust) (No 2) [2007] FCA 2086 (“McDonald”) at [24]). Further, the First Offer was a ‘tax free’ offer and was made assuming the Applicant was a contractor. The Respondent therefore submits that it was a significant offer in circumstances where the Applicant was claiming he was an employee and “[t]o obtain $250,000 after tax as an employee, the Court would have had to order that Simonds make taxable income payments in the range of $400,000 plus. The ambitious employment claim was not worth that much. There was no basis then for him to think he would have obtained a costs order even if he won. It was such a good offer. That is why it was profoundly unreasonable to refuse it.”;
(3)the Applicant “…prosecuted, on the facts known to him, a wildly ‘ambitious project’ [see McDonald at [25]]. And he did so with a certain hubris. That hubris is demonstrated with the blunt rejection of generous offers to settle, especially the
31 January 2020 Offer ($250,000).”;(4)in the context of being offered a significant compromise, the Applicant, in effect, ‘chanced his arm’ in continuing the proceedings (which ultimately went against him as the application was dismissed) which resulted in significant cost, which was reckless, and therefore unreasonable, conduct.
Alternatively and separately, the Respondent submits at [28] that the Second Offer was made just after an interlocutory decision was, in effect, made in favour of the Respondent on
2 September 2020 (see Goulding v Simonds Homes Victoria Pty Ltd [2020] FCCA 2457) and that the Second Offer was “summarily dismissed” by the Applicant. The Respondent goes on to submit at [29] that the Third Offer, as a final ‘walk away offer’ which was never responded to by the Applicant, was made in circumstances where both parties had filed its material, the critical issues had been identified and fully ventilated, and both parties had incurred significant costs up to that point.For these reasons, the Respondent submits that s570 of the FW Act is enlivened.
As to the application for indemnity costs, the Respondent refers to the decision of
Umoona Tjutagku Health Service Aboriginal Corporation v Walsh [2019] FCAFC 32 (“Walsh”) where the Full Court discussed the Court’s discretion to award costs pursuant to
s43 of the Federal Court of Australia Act1976 (Cth). At [48] of Walsh, the Full Court stated:48. It has long been established that the Court may, in the exercise of the discretion under s 43 of the FCA Act, award costs on a solicitor/client or indemnity basis where the particular circumstances of the case warrant the Court departing from the ordinary practice of awarding costs on a party and party basis. As Sheppard J explained in Colgate‑Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 (Colgate Palmolive) at 233, there should be some special or unusual feature in the case to justify the Court departing from the ordinary practice. Examples of circumstances identified by Sheppard J which may justify an order for indemnity costs include “an imprudent refusal of an offer to compromise”: Colgate Palmolive at 233 [5]. This includes, but is not necessarily limited to, the refusal of a so-called “Calderbank offer”. The applicable principles were conveniently explained by Goldberg J in Szencorp Pty Ltd v Clean Energy Council Limited (No 2) [2009] FCA 196 (Szencorp) as follows:
6. The appellation “Calderbank offer” has its origin in the decision of the English Court of Appeal in Calderbank v Calderbank [1976] Fam 93 at 106. In essence, a Calderbank offer is one which is made in a proceeding before judgment on the basis of it being without prejudice save as to costs and in which an offer for settlement or resolution of the proceeding is made. The right is reserved to refer to the offer if any issue arises as to costs once judgment is delivered. A court can take the offer into account in determining what costs order should be made notwithstanding that the payment into court procedure provided in the court’s rules has not been followed. If the party to whom the offer is made does not obtain a more favourable result than the offer made and it is established that in the circumstances of the case that party ought to have accepted the offer, then costs will be awarded on the same basis as if there had been a payment into Court prior to judgment and judgment for a lesser amount had been obtained.
7. The refusal or rejection of a Calderbank offer, of itself, does not automatically mean, or give rise to a presumption, that the Court should make an order for costs on either a party/party basis or (depending on the circumstances) an indemnity basis where the result is less favourable to the offeree than the offer. It must be established that it was unreasonable in all the circumstances for the offeree to reject the offer: Jacomb v Australian Municipal, Administrative, Clerical & Services Union [2004] FCA 1600 at [6]; Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435 at 440.
The Respondent submits at [33] – [36] that:
33. Non-acceptance of an offer which was better than the ultimate result itself, prima facie, demonstrates unreasonable conduct warranting indemnity costs. It is sufficient to assess whether the rejection of the offer was imprudent. The public policy of encouraging settlement of litigation should lead the Court to make an order for indemnity costs where a Calderbank offer has been made in terms which are clear. That is this case. However, there is no automatic presumption.
34. In this proceeding, there was always a ‘serious risk’ of a court making a determination adverse to Goulding’s interests. There was a complete failure at trial. That failure rested squarely with Goulding’s own design of the tripartite labour supply arrangement and his lack of candour at trial (credit).
35. It is open for the Court to order indemnity costs from 7 February 2020 (the date $250,000 rejected) because Goulding was profoundly imprudent in rejecting a very significant and generous offer to resolve all matters in the litigation.
36. On any sensible view of the facts, Goulding can neither explain nor justify the rejection of the 31 January 2020 Offer of $250,000 13 months out from trial; or the 25 September 2020 Offer 5 months out from trial.
(References removed)
THE APPLICANT’S SUBMISSIONS
The Applicant seeks that there be no orders as to costs and, in effect, the Respondent’s application be dismissed. The Applicant’s position is that that the Respondent, as the party making the application for costs, has not met the burden of establishing that s570(2) of the
FW Act should apply in this matter, in that the Respondent has failed to establish that it was unreasonable for the Applicant not to accept the three offers of compromise.
In respect of the First Offer, the Applicant submits that it was not unreasonable for him to not accept the First Offer as it was open for a significantly short period of time, being five business days or seven days total. The Applicant refers to r25.05(3) of the Federal Court Rules 2011 (Cth) (“the Federal Court Rules”), which states “[a]n offer [to compromise] may be limited in time for which it is open to be accepted, however the time must not be less than 14 days after the offer is made.” and goes on to make reference to r26.03(3) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic), which, in effect, provides for the same time period for which an offer to compromise shall be open to be accepted.
The Applicant submits that, on the basis of the above legislative provisions, it is clear that it was “the intention of both federal and state legislators to have offers of compromise remain open for acceptance for at least 14 days unless extraordinary circumstances apply.”
The Applicant goes on to say that, despite some exceptions, the case law supports that submission, in particular, the ‘guiding principle’ set out in Young v Young [1998] 2 FLR 1131, 1140 (per Thorpe LJ with whom Chadwick and Butler-Sloss LLJ agreed) that “Calderbank offers do not bite until the recipient has a reasonable opportunity to consider the proposed compromise.” As an example, the Applicant refers to the case of Edwards Madigan Torzillo Briggs Pty Ltd v Gloria Stack & Ors [2003] NSWCA 302, where the Court of Appeal (per Davies AJA with whom Mason P and Meagher JA agreed) stated at [22]:22 A Calderbank offer should be one which it would be reasonable for the other party to accept and should be written at a time when the other side has a reasonable opportunity to consider and to respond to it. The subject letters were written at such an early stage of the complex litigation that the plaintiff did not have a fair opportunity to consider the offer. Moreover, the fourteen days provided in the notices, much less that the period specified in Part 22 rule 3 of the [Supreme Court Rules 1970 (NSW)], was unreasonable.
On that basis, the Applicant submits that there was no exceptional circumstances to justify the First Offer being open for a seven-day period, in circumstances where the matter would not come before the Court for final hearing for over a year, where a number of material facts were unknown to the Applicant and where a significant amount of the evidential material had not yet been filed. At [12] of the submissions, the Applicant refers to a list of 14 documents which were relied on in the substantial proceedings but had not been filed at the time the First Offer was made. For these reasons, the Applicant says that it was reasonable for the Applicant not to accept the First Offer.
In respect of the Second Offer, the Applicant briefly submits that the same considerations that applies to the First Offer also apply to the Second Offer in that, where the final hearing in the substantive proceedings was approximately six months away, there was no exceptional circumstances that justified the offer being open for seven days. On that basis, the Applicant says it was unreasonable for the Respondent to “force a decision on the Applicant”, and it was not unreasonable for the Applicant not to accept the Second Offer.
In respect of the Third Offer, the Applicant, points to the fact that that the offer was only open for one business day (or three days total) and was not a genuine offer of compromise. The Applicant submits at [18] that:
18. […] It was unreasonable for the Respondent to force a decision onto the Applicant whether to accept the Third Offer within that period, and it was not unreasonable for the Applicant not to accept the Third Offer in such needlessly rushed circumstances. The offer could have been made a week, or a month before. Moreover, the Third Offer in fact offered nothing. Instead, it was a letter demanding that the Applicant capitulate unconditionally. Clearly, in those circumstances it was not unreasonable for the Applicant to not accept it.
In the alternative, if the Court was minded to make an application for costs, the Applicant puts two propositions as follows:
(1)if the Court were to order costs, it should be done so on party-party or solicitor-client basis, and should be taxed; or
(2)if the Court were to order costs on an indemnity basis, they should be taxed, as such costs must be just and reasonable, and the Respondent’s evidence as set out in Ms Prpich’s affidavit at annexure AMP-3 (which is a bundle of invoices of costs incurred by the Respondent in these proceedings) does not allow for the determination of how the alleged fees were incurred, as the large majority of the descriptions of each charge set out are ‘blacked out’, which is contrary to the principle that a party demonstrate that each cost was duly incurred.
CONSIDERATION
In relation to Calderbank offers, the Court will ordinarily have regard to at least the following matters:
(1)the stage of the proceeding at which the offer was received;
(2)the time allowed to the offeree to consider the offer;
(3)the extent of the compromise offered;
(4)the offeree’s prospects of success, assessed as at the date of the offer;
(5)the clarity with which the terms of the offer were expressed; and
(6)whether the offer foreshadowed an application for indemnity costs in the event of the offeree’s rejecting it: see Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority(No. 2) (2005) 13 VR 435 at [25].
As was stated by Tracey J in Bashour v Australia and New Zealand Banking Group Limited [2017] FCA 183 at [147]:
147. The costs consequences of a Calderbank offer lie in the discretion of the court. It will be exercised having regard to the particular circumstances of the case […]
The Court is of the view that, despite the short window of opportunity in which to accept the offers and the circumstances in which the offers were made, the failure on the part of the Applicant to accept the offers of settlement, in particular the First Offer, was an unreasonable act and the Respondent is entitled to costs.
In Shea v EnergyAustralia Services Pty Ltd (No 2) [2015] FCAFC 14, the Full Court (Rares, Flick and Jagot JJ) stated at [11] that:
11. […] the power to order costs, once a criterion in s 570(2) has been satisfied, is discretionary and should be exercised, not so as to impose a penalty or punishment on the losing party but to provide an appropriate means of compensating the successful party having regard to all of the circumstances: see Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56; (2007) 234 CLR 52 at 62-65 [24]-[34] per Gleeson CJ, Gummow, Hayne and Crennan JJ; Kazar v Kargarian [2011] FCAFC 136; (2011) 197 FCR 113 at 115-117 [2]- [9] per Greenwood and Rares JJ.
The Court is mindful that the consequences of the findings in this judgment are financially significant for the Applicant. However, the Respondent acted reasonably and appropriately in making clear and genuine offers of compromise throughout the course of the proceedings. Further, to fail to give effect to the cost consequences of failing to accept the offers made by the Respondent may act as a disincentive to parties making reasonable offers to resolve contested litigation in the future.
I do not regard the fact that the First Offer was open for only seven days to be unreasonable. The offer was made in circumstances where the Applicant was experienced in financial and accounting matters, where he was aware of the arrangements that he had agreed with the Respondent and where the offer made by the Respondent to pay $250,000 to settle the matter was reasonable, even if the Applicant’s view of the effect of the arrangements between the parties was accepted. The Applicant rejected the offer (which was clear in its terms) and did not seek more time to consider the offer, for instance, by seeking an extension of time so as to obtain further legal or accounting advice. The fact that the period for acceptance was less than that required in respect of a statutory offer to compromise (for example, as set out in the Federal Court Rules) does not mean that it was unreasonable by reason of that fact. The letter sent to the Applicant on 31 January 2020 made plain the reasons for the quantum of the offer and that the Respondent would be relying on s570(2) of the FW Act if the offer was not accepted. The length of time allowed for the acceptance of the offer was also reasonable given that the matter was listed for hearing on 14 April 2020 and the Respondent wished to avoid the costs of preparing for hearing.
I accept the submission of the Applicant that the state of evidence relied upon by the Respondent is such that the Court is not in position to determine whether the quantum of costs claimed on an indemnity basis were reasonably incurred. Counsel for the Respondent refers to the costs incurred by the Respondent up to the final hearing as “vast”. I do not understand what about this case required ‘vast’ costs to be incurred. I note that the indemnity costs claimed in the Respondent’s application for costs are in the total sum of $275,795, of which the Applicant seeks orders for $190,000 to be paid by the Applicant.
Further, whilst I find that the Applicant was unreasonable in not accepting the First Offer, there is no submission that, thereafter, the Applicant conducted the proceeding in a way that led to the Respondent to incur undue costs because of that conduct. At final hearing, the Applicant’s case was conducted efficiently and he was the only witness called on his behalf.
I note that the Court has a discretion to award a lump sum amount for costs without formal assessment or taxation: see Beach Petroleum NL v Johnson (No. 2) (1995) 57 FCR 119 at [120]. In fixing that sum, although the Court must act judicially in awarding a lump sum amount, the Court is not required to do so in any "scientific or formulaic manner": see Idoport Pty Ltd v the National Australia Bank Ltd [2007] NSWSC 23 at [10]; see also Thompson & Finch & Ors [2020] FamCAFC 230 at [52] – [53].
In Abdi v Equitable Financial Solutions Pty Ltd & Anor [2020] FCCA 2521, Judge Kelly stated at [56] – [57] that:
56. Part 21 of the Rules, which concerns the issue Costs provides, in Div 21.02, that an application to costs may be made at any stage in a proceeding and that in making an order for costs, the Court may set the amount of those costs, set the method by which they are to be calculated, refer the issue for taxation or set a time for their payment: r 21.02(1)-(2). Where the Court determines that the power to order costs is engaged and that it should exercise its discretion to do so, it is the invariable practice of the Court to fix costs: Alrjoob v Minister for Home Affairs [2018] FCA 1144 [20] (Collier J). There is no requirement, in either the Act or the Rules, that as a condition to the exercise of its discretion to award costs there should first be production of an itemised bill: AOJ15 v Minister for Immigration and Border Protection [2017] FCA 675, [44] (Burley J).
57. In fixing a lump sum for costs, the Court is to approach the task as one of estimation and assessment and not of arithmetic calculation or precision and is of a more broad brush approach than that which is to be taken upon taxation. Accepting those principles to be settled, the approach must be logical, fair and reasonable: Zaghoul v Jewellery & Gift Buying Service Pty Ltd [2020] FCA 1045, [172] (Banks-Smith J); see also BEL17 v Minister for Immigration and Border Protection [2020] FCA 1045, [26].
Given the quantum of costs sought, even on a party/party basis, I am not in a position to determine whether those costs are reasonably incurred and therefore I will make an order that the Respondent’s costs be taxed in default of agreement between the parties.
For these reasons, the Court will make orders that:
(1)the Applicant pay the Respondent’s costs on a party/party basis from 8 February 2020 up to and including the final hearing, with such costs to be taxed in default of agreement between the parties; and
(2)
in default of agreement between the parties as to the amount of those costs within
28 days of the date of these orders, the proceedings be referred to a Registrar or Senior Registrar of the Federal Circuit Court of Australia for the determination of fixing a lump sum of costs.
I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment of Judge McNab. Associate:
Dated: 3 August 2021
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