FEDERAL COURT OF AUSTRALIA
Natch v Stennson Pty Ltd (No 2) [2024] FCA 1498
File number(s): VID 569 of 2019
VID 720 of 2021Judgment of: O'BRYAN J Date of judgment: 20 December 2024 Catchwords: COSTS – order for costs made against applicants – taxation of costs before a Registrar as taxing officer – where applicants sought discovery for the purposes of the taxation pursuant to r 20.15 of the Federal Court Rules 2011 (Cth) (FC Rules) – where Registrar dismissed discovery application – review of Registrar’s decision pursuant to s 35A(5) of the Federal Court of Australia Act 1976 (Cth) and r 3.11 of the FC Rules – where review of Registrar’s decision is by way of hearing de novo – where sufficient basis for discovery not established by the applicants – application for review of Registrar’s decision dismissed with costs
PRACTICE AND PROCEDURE – whether Registrar has power to order discovery pursuant to r 20.15 of the FC Rules for the purposes of taxation
Legislation: Federal Court of Australia Act 1976 (Cth) ss 35A(1)(h), 35A(5)
Federal Court Rules 2011 (Cth) rr 3.11, 20.15, 40.17, 40.18, 40.20, 40.21, 40.25, 40.26, 40.28, 40.34, 40.35, Sched 2 item 159
Supreme Court (General Civil Procedure) Rules 2015 (Vic) rr 29.07, 63.35
Cases cited: Adams v London Improved Motor Coach Builders Ltd [1921] 1 KB 495
Ausvest Holdings Pty Ltd v Russell Kennedy (a firm) [2004] VSC 365
Bechara v Bates (2021) 286 FCR 166
Cachia v Hanes (1994) 179 CLR 403
Cassimatis v Australian Securities and Investments Commission [2016] FCA 131
Director of the Fair Work Building Industry Inspectorate v Abbott (No 5) [2013] FCA 522
Frigger v Banning (No 13) [2023] FCA 923
Garrard (t/as Arthur Anderson & Co) v Email Furniture Pty Ltd (1993) 32 NSWLR 662
General of Berne Insurance Co v Jardine Reinsurance Management Ltd [1998] 2 All ER 301
Giannarelli v Wraith (No 2) (1991) 171 CLR 592
Harold v Smith (1860) 157 ER 1229
Harris v Caladine (1991) 172 CLR 84
Kuek v Devflan Pty Ltd [2011] VSCA 25
Mainieri v Cirillo (2014) 47 VR 127
Mango Boulevard Pty Ltd v Whitton [2018] FCA 399
Natch v Stennson Pty Ltd [2022] FCA 641
Division: General Division Registry: Victoria National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Number of paragraphs: 67 Date of hearing: 16 December 2024 Counsel for the Applicants: L Alampi Solicitor for the Applicants: TLM Law Counsel for the Respondent: T Scotter Solicitor for the Respondent: KCL Law ORDERS
VID 569 of 2019 BETWEEN: MOHAN NATCH
First Applicant
MOHAN NATCH AND KARAN NATCH (AS EXECUTORS AND TRUSTEES OF THE WILL OF ANDAL NATCH)
Second Applicant
OWNERS CORPORATION PLAN NO SP026738V
Third Applicant
AND: STENNSON PTY LTD (ACN 109 103 559)
Respondent
ORDER MADE BY:
O'BRYAN J
DATE OF ORDER:
20 DECEMBER 2024
THE COURT ORDERS THAT:
Application to review discovery decision
1.The application to…
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- AGLC
- Natch v Stennson Pty Ltd (No 2) [2024] FCA 1498
- Case
- [2024] FCA 1498
- Decision Date
CaseChat Overview and Summary
The primary legal issue before the Court was whether the Registrar had the power to order discovery for the purposes of taxation under rule 20.15 of the Federal Court Rules 2011 (Cth). The Court found that the applicants had not established a sufficient basis for discovery, and thus, the application for discovery was rejected. The Court also dismissed the applicants' review of the Registrar's decision, and ordered that they pay Stennson's costs of the review application in a lump sum. The Court further ordered that the quantification of the costs would be determined on the papers, and scheduled further hearings and submissions regarding the taxation of costs.
The Court concluded that the applicants had not provided sufficient grounds for suspecting that the costs sought by Stennson breached the indemnity principle. The Court found that the Registrar's dismissal of the discovery application was proper, and that the applicants' review of the decision was unsuccessful. The Court ordered that the applicants pay Stennson's costs of the review application in a lump sum, and scheduled further hearings and submissions regarding the taxation of costs. The Court also noted that the parties had proceeded on the basis that the application for review was properly brought under section 35A of the Federal Court of Australia Act 1976 (Cth), and that the Court was required to conduct a de novo hearing.
The Court's decision in this case highlights the importance of establishing a sufficient basis for discovery and the power of the Registrar to order discovery for the purposes of taxation. The Court's order for the applicants to pay Stennson's costs of the review application in a lump sum also demonstrates the importance of careful consideration of costs orders in litigation. The Court's further directions for the taxation of costs indicate that the matter is ongoing and that the parties will need to continue to address the issues raised in this case.
Orders
Orders of the court
Application to review discovery decision
1. The application to review a Registrar’s decision filed by the applicants on 15 November 2024 be dismissed.
2. The applicants pay the respondent’s costs of the application referred to in order 1.
3. The costs referred to in order 2 be awarded in a lump sum pursuant to r 40.02(b) of the Federal Court Rules 2011 (Cth).
4. By 31 January 2025, the respondent file and serve any evidence to be relied upon and an outline of submissions limited to 3 pages with respect to the quantification of the costs to be awarded in accordance with orders 2 and 3.
5. By 7 February 2025, the applicants file and serve an outline of submissions limited to 3 pages with respect to the quantification of the costs to be awarded in accordance with orders 2 and 3.
6. The quantification of the costs to be awarded in accordance with orders 2 and 3 will be determined on the papers.
Application to review taxation
7. By 7 February 2025, the applicants file and serve:
(a) any amended application for review of taxation; and
(b) an outline of submissions in respect of the application for review of taxation, limited to 10 pages.
8. By 18 February 2025, the respondent file and serve an outline of submissions in respect of the application for review of taxation, limited to 10 pages.
9. The application for review of taxation be listed for hearing at 10.15 am on 21 February 2025.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
At the hearing, Mr Natch submitted that the Judicial Registrar should not accept Ms Terranova’s assertion with respect to the indemnity principle. The Judicial Registrar asked Mr Natch if he sought Ms Terranova’s statement to the Court to be put on affidavit, and Mr Natch confirmed that he did. Ms Terranova agreed to do so. As a consequence, Stennson’s solicitor, Mr Cain, affirmed an affidavit on 20 August 2024 in both proceedings, which were read at the hearing, and in which he deposed that the solicitor-client legal costs rendered by KCL Law and/or Counsel to Stennson in each of the principal proceeding and the appeal proceeding:(a)exceeded the legal costs sought on a party/party basis in the taxation by Stennson; and(b)had been paid in full by Stennson.Consideration of the application for reviewDe novo hearing Ordinarily, a review of a Registrar’s decision under s 35A(5) of the FCA Act is by way of a hearing de novo: Harris v Caladine (1991) 172 CLR 84; Bechara v Bates (2021) 286 FCR 166 at [17]. That can be contrasted with a review of a taxation (and any consequential orders) under r 40.34 of the FC Rules, which has elements of a hearing de novo but in which new evidence is not permitted and in which the Court considers the conclusions reached by the taxing officer: Cassimatis v Australian Securities and Investments Commission [2016] FCA 131; 334 ALR 350 at [13]-[14] (Edelman J). In the present matter, the Judicial Registrar made a decision with respect to discovery in the context of a taxation process. A question might arise whether a review of the Registrar’s decision on discovery in that context is properly made under s 35A of the FCA Act or should be characterised as a review of a “consequential order” under r 40.34. It is unnecessary to address that question as both parties proceeded on the basis that the application for review was properly brought under s 35A of the FCA Act and that the Court was required to conduct a de novo hearing. There are a number of consequences flowing from the conduct of a de novo hearing. First, the Court is not reviewing the Registrar’s decision for error but is conducting a new hearing. Second, the Court determines the matter on the evidence adduced at the new hearing, which can include evidence previously relied upon and supplementary evidence. Third, complaints about procedural fairness during the hearing before the Registrar are not material if and to the extent that the conduct of the review hearing is able to remedy any procedural unfairness in the earlier proceeding. In the present case, I consider that the matters of procedural unfairness raised by Mr Natch in his written submissions have been remedied in the current review hearing. It is therefore unnecessary to determine whether Mr Natch’s complaints involved procedural unfairness.Registrar’s power to order discovery for the purposes of taxation The discovery application was an application for non-standard discovery under r 20.15 of the FC Rules. A preliminary question arises with respect to the powers of a Registrar of this Court, acting as a taxing officer, to order discovery under r 20.15 for the purposes of taxation. The parties did not address that question.