National Healthcare Unity Pty Ltd Trading as Mole Check Clinic v Cutera Australia Pty Ltd
[2020] FCCA 3278
•4 December 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| NATIONAL HEALTHCARE UNITY PTY LTD TRADING AS MOLE CHECK CLINIC v CUTERA AUSTRALIA PTY LTD & ANOR | [2020] FCCA 3278 |
| Catchwords: CONSUMER LAW – Costs – determination of the quantum of party/party costs. |
| Legislation: Federal Circuit Court of Australia Act 1999 (Cth), s.79. Federal Circuit Court Rules 2001 (Cth), rr. 13.01, 21.02. |
| Cases cited: A2B Australia Limited & Anor v Oz Power Group Pty Ltd & Anor [2020] FCA 2623 Abdi v Equitable Financial Solutions Pty Ltd & Anor [2020] FCCA 2521 Beach Petroleum NL v Johnson (No. 2) (1995) 57 FCR 119 Idoport Pty Ltd v the National Australia Bank Ltd [2007] NSWSC 23 Thompson & Finch & Ors [2020] FamCAFC 230 |
| Applicant: | NATIONAL HEALTHCARE UNITY PTY LTD TRADING AS MOLE CHECK CLINIC (ACN 167 067 647) |
| First Respondent: | CUTERA AUSTRALIA PTY LTD (ACN 104 450 231) |
| Second Respondent: | CUTERA INC (C2073455) |
| File Number: | MLG 1932 of 2020 |
| Judgment of: | Judge McNab |
| Hearing date: | 30 October 2020 |
| Date of Last Submission: | 18 November 2020 |
| Delivered at: | Melbourne |
| Delivered on: | 4 December 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr P Miller |
| Solicitors for the Applicant: | P & B Law |
| Counsel for the Respondents: | Ms M Marcus |
| Solicitors for the Respondents: | Baker & McKenzie |
ORDERS
The Applicant pay the First Respondent’s costs of, and incidental to, the First Respondent’s Application in a Case filed on 1 October 2020 on a party/party basis fixed in the sum of $12,136.96.
The Applicant pay those costs within 7 days of the date of these orders.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1932 of 2020
| NATIONAL HEALTHCARE UNITY PTY LTD TRADING AS MOLE CHECK CLINIC (ACN 167 067 647) |
Applicant
And
| CUTERA AUSTRALIA PTY LTD (ACN 104 450 231) |
First Respondent
| CUTERA INC (C2073455) |
Second Respondent
REASONS FOR JUDGMENT
On 1 October 2020, the First Respondent filed an Application in a Case to have the proceeding summarily dismissed pursuant to r13.01(b) and r13.01(c) of the Federal Circuit Court Rules 2001 (Cth) (“the Rules”). The Applicant opposed the application for summary dismissal.
The matter came before the Court on 30 October 2020. After hearing submissions made by parties, the matter was stood down so that the parties could have discussions. When the matter resumed, the Court was informed by Counsel for both parties that the matter had resolved. Following a further brief discussion with Counsel, the Court made orders with the consent of the parties on that day as follows:
“1. The proceeding be dismissed with the parties to bear their own costs, save that the Applicant pay the First Respondent’s party/party costs of, and incidental to, the Application filed on 1 October 2020, with the quantum of the costs to be fixed by the Court in default of agreement being reached by the parties within 7 days hereof.
2. In the event that costs are not agreed to by the parties within 7 days:
(a) the First Respondent file a schedule of costs and submissions (limited to 2 A4 pages) by 4.00pm on 11 November 2020;
(b) the Applicant file a Response (limited to 2 A4 pages) by 4.00pm on 18 November 2020; and
(c) the question of quantum of costs then be determined on the papers.
3. The Applicant pay the costs ordered by the Court, or determined by agreement by the parties, within 7 days of an order being made in accordance with order 2 herein or agreement being reached.”
The First Respondent filed submissions and a schedule of costs on 11 November 2020. The Applicant filed submissions in reply on 18 November 2020.
Judgment was reserved on 20 November 2020 and the Court must now determine the quantum of costs.
Court’s Jurisdiction as to Costs
Subsection 79(2) and subsection 79(3) of Federal Circuit Court of Australia Act 1999 (Cth) provides that:
“…
(2) The Federal Circuit Court of Australia or a Judge has jurisdiction to award costs in all proceedings before the Federal Circuit Court of Australia (including proceedings dismissed for want of jurisdiction) other than proceedings in respect of which any other Act provides that costs must not be awarded.
(3) Except as provided by the Rules of Court or any other Act, the award of costs is in the discretion of the Federal Circuit Court of Australia or Judge.”
Rule 21.02 of the Rules also 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.”
The First Respondent’s and Applicant’s Submissions
The First Respondent relies on the submissions filed on 11 November 2020, which includes a summary of work done (“the summary”), and two schedules of costs, being for September 2020 (“the September schedule”) and October 2020 (“the October schedule”). The Applicant relies on the submissions filed on 18 November 2020.
The First Respondent seeks costs orders that include 75% of its solicitor-client fees of the application and 100% of its disbursements: see First Respondent’s submissions at [7]. On that basis, and by way of the summary and schedules of costs, the First Respondent seeks costs as follows:
a)$55,364.63 for solicitor-client costs, being 75% of the total solicitor-client costs which are claimed to be in the sum of $73,819.50: see the September schedule and October schedule; and
b)$16,923.96 being 100% of the First Respondent’s disbursements, which includes $15,866.00 for Counsel’s fees: see First Respondent’ summary at page 4.
As such, the First Respondent seeks costs in the total sum of $72,288.59.
The First Respondent submits at [3] that:
a)it is widely accepted that the Federal Circuit Court has an ability to order costs under the Federal Court Scale: see A2B Australia Limited & Anor v Oz Power Group Pty Ltd & Anor [2020] FCA 2623 at [13] per Judge Baird; and
b)further, “…the Federal Court’s costs practice note states that the Court will consider the appropriateness of making a special costs order in circumstances which may warrant it, including where the parties raise unmeritorious arguments before the Court or otherwise conduct themselves inappropriately in the litigation.”
The First Respondent submits at [4] that it is appropriate for the Court to apply the Federal Court scale in this matter on the basis that the Applicant’s “actions were entirely inappropriate and an abuse of process”. The First Respondent submits at [4] – [6] that:
“4. […] Despite having settled the matter in December 2019, and despite an ongoing and open offer in the same terms prior to instituting these proceedings, Mole Check instituted proceedings anyway, seeking damages that could never be justified. The fundamental flaws with Mole Check’s damages claim were made clear in correspondence, but it pressed on with its claim and resisted this application.
5. Cutera Australia had no choice other than to seek the proceedings be summarily dismissed. This was an extremely costly exercise, involving a detailed examination of vast numbers of documents and lengthy affidavits dealing with unusual circumstances. Mole Check’s intransigent position throughout added significantly to the costs, be it the five affidavits filed by its solicitors or its oral and written submissions before the Court stubbornly maintaining a hopeless position.
6. To award Cutera Australia costs on the basis of the event-based scale in the FCCR would not achieve fairness, would virtually penalise Cutera Australia, and would not appropriately reflect the outrageous conduct of Mole Check throughout these proceedings and in relation to the application.”
The Applicant, while not able to oppose cost orders altogether, opposes the First Respondents submissions as to costs effectively because they are manifestly excessive and because it is ‘unclear’ how the proportions sought by the First Respondent, as set out above, were determined: see Applicant’s submissions at [3].
The Applicant further submits at [3] that:
“The amount sought by the first respondent would reflect an assessment of indemnity costs on the basis of a fee agreement. In this respect, the first respondent appears to expressly seek an order tantamount to a special costs order. A special costs order was not agreed by the parties, and not made by the Court. Insofar as the first respondent’s submission is treated as an application for indemnity costs, it is opposed on the basis that (a) a special costs order was not agreed; (b) the first respondent has made no application to vary the order made on 30 October 2020 under r 16.05 of the Court Rules; (c) it would be inappropriate to order indemnity costs in the absence of any determination of the issues in the proceeding, and where the parties have reached agreement to resolve the proceeding prior to the determination of the issues; (d) the applicant’s position was that no concluded settlement had been reached, and this was addressed in written and oral submissions in opposition to the summary judgment application. Ultimately, the Court was not required to decide the question. In those circumstances, the first respondent’s submission that the proceeding was an abuse of process cannot be accepted; and (d) the present settlement between the parties is not in evidence.”
On that basis, the Applicant submits that it would not be appropriate for the Court to order party/party costs as proposed by the First Respondent.
The Applicant further submits at [4] that the appropriate assessment should be made by reference to Schedule 1 of the Rules and by reference to the Federal Court scale if appropriate. The Applicant submits at [5] – [7] that:
“5. As to the first respondent’s costs of the application, the following items under schedule 1 of the Court Rules are enlivened (as it applies to general federal law matters):
Item 1 Initiating an application $2,992
Item 3 Interim hearing $1,867
Item 13 Daily hearing fee (half day) $1,120
6. As to counsel fees, it is appropriate to have regard to the National Guide to Counsel Fees, as referred to in paragraph 16.1 of schedule 3 to the Federal Court Rules 2011 (Cth). The appropriate range is between $1,275 to $5,100 as indicated in the National Guide to Counsel Fees, which includes “fee on brief – including: preparation at discretion of taxing officer and appearance on the first day of a hearing.” The applicant accepts that the highest part of the range should apply, and therefore, adopts $5,100.
7. As to other disbursements, the applicant accepts the other disbursements as claimed: filing fee - $1,000; ASIC searches - $48.28; property/company search - $9.68. On the basis of the above, the appropriate assessment of the first respondent’s party party costs of, and incidental to, the application filed on 1 October 2020 is in the amount of $12,136.96.”
Consideration
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].”
The parties agreed at the hearing on 30 October 2020 to have orders made by the Court for the Applicant to pay the First Respondent’s costs of the Application in a Case filed on 1 October 2020 on a party/party basis. The First Respondent is now effectively asking the Court to fix costs on a different basis, that being solicitor-client costs or indemnity costs. To accede to the First Respondent’s submissions as to the quantum of the costs would involve the Court making orders in a manner contrary to the orders agreed to by the parties. It could be a different matter had the parties agreed to orders that the costs be determined in a manner other than on a party/party basis.
The Court accepts the Applicant’s calculation of the First Respondent’s party/party costs in accordance with the scale of costs fixed by the Rules. Accordingly, the Court orders that the Applicant pay the First Respondent’s costs of the application fixed in the sum of $12,136.96.
I certify that the preceding nineteen (19) paragraphs are a true copy of the reasons for judgment of Judge McNab
Associate:
Date: 4 December 2020
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