Morris v McConaghy Australia Pty Ltd (No.3)

[2018] FCCA 3052

FEDERAL CIRCUIT COURT OF AUSTRALIA

MORRIS v MCCONAGHY AUSTRALIA PTY LTD (No.3) [2018] FCCA 3052

Catchwords:

INDUSTRIAL LAW – Application to set aside the Certificate of Taxation.

Legislation:

Federal Circuit Court of Australia Act 1999 (Cth), s.14
Federal Circuit Court Rules 2001 (Cth), rr.16.05, 20.01

Applicant: JONATHON MORRIS

Respondent: MCCONAGHY AUSTRALIA PTY LTD (ACN 168 218 380)

File Number: SYG 1137 of 2017

Judgment of: Judge Street

Hearing date: 16 August 2018

Date of Last Submission: 16 August 2018

Delivered at: Sydney

Delivered on: 16 August 2018

REPRESENTATION

Counsel for the Applicant: Mr E Cox

Solicitors for the Applicant: Aus Ship Lawyers

Solicitors for the Respondent: Mr A Battagello
Lander & Rogers

ORDERS

1. The order made on 14 September 2017 is varied by deleting the words that appear after 28 June 2017 and inserting the words “as fixed by the Court”.

2. The Court sets aside the Certificate of taxation dated 23 July 2018.

3. The costs to be paid by the applicant to the respondent pursuant to the order made on 14 September 2017 as varied are fixed in the amount of $32,322.36.

4. The applicant to pay the respondent’s further costs of the application in a case fixed in the amount of $2,275.00.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 1137 of 2017

JONATHON MORRIS

Applicant

And

MCCONAGHY AUSTRALIA PTY LTD (ACN 168 218 380)

Respondent

REASONS FOR JUDGMENT

1. These proceedings were commenced on 12 April 2017. On 28 June 2017, this Court made orders after orders for mediation were not able to be complied with for the putting on of evidence and fixing the matter for hearing on 17 August 2017.

2. Following the orders of this Court fixing the matter for hearing, proceedings were commenced in the Federal Court of Australia raising, in part, the same subject matter as the subject matter of these proceedings. No application had been advanced exploring this Court’s associated jurisdiction and the parties provided an order in the following terms:

   1. The applicant pay the respondent’s legal costs and disbursements incurred in these proceedings on and from 28 June 2017 as well as reserved costs in an amount to be agreed or taxed under s.570 of the Fair Work Act 2009 (Cth).

3. Following the making of that order, the matter proceeded by way of the lodgement of a long-form bill of costs on 27 April 2018. A Registrar of the Court carried out an assessment in relation to that long-form bill of costs. The Court file reveals a notice of estimate being sent to all parties, including the office of the solicitor for the applicant, albeit it the solicitor’s address was not a DX address. 

4. Following the issue of the notice of estimate on 23 July 2018, in the absence of engagement by the applicant in response to the notice, a certificate of taxation was issued by the Registrar. On 8 August 2018, an application in a case was filed seeking orders to have the certificate set aside on the basis that the solicitor for the applicant deposed to not having received the notice of estimate. 

5. The application in a case sought orders for there to be a notice of objection after the setting aside of the certificate and an extension of time for response. Alternative orders were sought in relation to r 20.01 of the Federal Circuit Court Rules 2001 (Cth) (“the Rules”). 

6. Prior to the hearing of the motion, the Court indicated to both parties the preliminary view of the Court that it would be inclined, if it accepted the evidence that had been filed, to set aside the certificate of taxation and to vary the order made on 14 September 2017 and to provide for the costs to be as fixed by the Court, and that the Court would hear the parties on the long-form bill of costs and would fix the costs. The Court made reference to s 14 of the Federal Circuit Court of Australia Act1999 (Cth) (“the Act”) and the duty of the Court in that regard to bring finality to disputes between the parties. 

7. Submissions were advanced on behalf of the applicant at the commencement of the hearing of the motion that the Court had no power to vary the costs order that had been made. Reference was made to r 16.05 of the Rules, and it was submitted that the costs order was a final order that this Court had no power to vary. For certain purposes, such as under the Bankruptcy Act 1996 (Cth), the costs order would be treated as a final order. The order, however, is one which is subject to and remains subject to the Court’s control. The overriding duty of the Court under s 14 of the Act is of considerable importance in the present case.

8. The history of the proceedings is quite unsatisfactory. A Registrar of the Court has already spent time and effort in relation to carrying out a process that was ordered more than almost a year ago. This Court has power under r 16.05(3) of the Rules and under the powers confirmed through s 14 of the Act to make orders that bring the dispute to an end. 

9. Mr Cox, on behalf of the applicant, submitted that the Court should permit the matter to proceed back into the process of taxation in accordance with the Rules. To do so would be to protract the proceedings. 

10. It is apparent from the affidavit that was filed on 8 August 2018, that careful attention had been given to the long-form bill of costs shortly after it was filed on 27 April 2018. The long-form bill of costs was admitted into evidence in relation to the motion that was heard by the Court. 

11. I am satisfied the Court has ample power to make the orders in respect of the varying of the order made on 14 September 2017, and I am satisfied that it is necessary to do so in the interests of administration of justice and consistent with the duty under s 14 of the Act to bring all disputes between the parties to an end.

12. Given the opportunity to engage with the long-form bill of costs, rather than go through item by item identifying objections, there was a global approach taken by counsel for the applicant. The global approach was to identify what the costs would be if they had been calculated under the schedule. In that regard, the quantification was identified to be one in the order of $14,968.00. 

13. Submission was also put that there was no reason why, in the present case, the costs should be in excess of the Schedule. A submission was then put that the rates of the solicitors were high and should be reduced, and that the bill may contain solicitor/client work.  The applicant had the opportunity to go through line by line identifying objections to the bill of costs and chose not to do so. 

14. In those circumstances, the Court has taken into account the submissions advanced that this was a case of a kind under the Fair Work Act 2009 (Cth) in which there is no reason to depart from the Schedule. That submission is without substance. These proceedings were anything but the ordinary type of proceedings under the Fair Work Act 2009 (Cth) and reflected a shareholder director dispute of a kind in respect of which it was entirely reasonable for the respondent to have engaged in the process for the preparation at the rates of the partner, lawyer, paralegal, as identified in the bill of costs.

15. I am also satisfied that the scale amounts identified in the bill of costs, in the circumstances of the present case, are reasonable and are not outside the ordinary hourly rate in commercial litigation, which this litigation patently comprises. I am also satisfied that the work identified in the long-form bill of costs in items 1 to 58 were reasonable and that the amounts are appropriate on a party/party basis. The Court is also of the view that the amount identified in paragraph 59 for skilled care and responsibility is reasonable and appropriate in the context of this case.  The Court is also of the view that the disbursements identified in the present case in the long-form bill of costs are reasonable and appropriate.  The Court does not accept the submission that the hourly rates are excessive.  The Court does not accept the submission that the costs should be confined to the schedule amount, as advanced by the applicant. 

16. The submission was advanced that the Court should not itself engage in a taxation exercise.  The Court identified it was willing to do so. The Court was willing to hear submissions on an item-by-item basis.  No such submissions were advanced by the applicant. The Court does, however, take into account that there are references to communications with the client that may, in part, involve solicitor/client costs.  It is in those circumstances that the Court is of the view that it is appropriate to reduce by a small percentage the bill of costs to allow for what may be solicitor/client costs.

17. The Court finds that the respondent has incurred party/party costs in the amount of $36,846.29. The Court finds the respondent has incurred disbursements in the amount of $1002.97. Taking into account the deduction of 15 per cent, this would reduce the party/party costs to the amount of $31,319.39. Adding on the disbursements, this makes a total recoverable costs amount of $32,322.36. 

18. The respondent also sought an order for costs in respect of the attendance on the motion today. Counsel for the applicant opposed the costs order and submitted that the applicant had, in substance, succeeded because the certificate had been set aside. The certificate of taxation was set aside as a matter of fairness, in circumstances where the Court accepted that the solicitor had not received the notification sent by the Court in respect of the notice of estimate. Nonetheless, it was the applicant that was coming before the Court seeking the order as a matter of indulgence in circumstances where the matter had already been the subject of a final certificate. 

19. It is entirely appropriate and reasonable that the applicant pay the respondent’s costs.  The respondent’s solicitor identified the basis upon which the costs had been quantified. Mr Cox maintained that costs should be approximately half the amount and consistent with the scale.  The Court is of the view that the hours identified by the solicitor, the rates identified and the amount are reasonable and properly reflected the costs to which the respondent is entitled.

I certify that the preceding nineteen (19) paragraphs are a true copy of the reasons for judgment of Judge Street

Associate: 

Date:  26 October 2018