Pratt v Latta (No 2) - [2002] FMCA 43

FEDERAL MAGISTRATES COURT OF AUSTRALIA

PRATT & ORS v LATTA & ANOR (No. 2)

[2002] FMCA 43

COSTS – consideration of the operation of the Federal Magistrates Court scale of costs – enforcement and taxation of costs under the Federal Magistrates Court Rules considered.

Federal Court Rules
Federal Magistrates Court Rules 2001
Trade Practices Act 1974 (Cth)

Suew Fong Lin v Official Trustee in Bankruptcy (No 2) [2002] FMCA 1

First Applicant:	DORIS PRATT
Second Applicant:	BRYAN PRATT
Third Applicant:	BRONWEN PRATT

First Respondent:

JAMES LATTA

Second Respondent:

LYN BRITZ LIMITED

trading as HORIZON REAL ESTATE

File No:

CZ10 of 2000

Delivered on:

22 March 2002

Delivered at:	Canberra
Hearing Date:	22 March 2002

Judgment of:

Driver FM

REPRESENTATION

Solicitors for the Applicant:

Ms M Tsui
Vandenberg Reid

Counsel for the Respondent:	Mr J Constance
Solicitors for the Respondent:	Snedden Hall & Gallop

ORDERS

That the respondents pay to the applicants the sum of $17,543.59 within 21 days of the date of entry of these orders.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
CANBERRA

CZ10 of 2000

DORIS PRATT

First Applicant

BRYAN PRATT

Second Applicant

BRONWEN PRATT

Third Applicant

And

JAMES LATTA

First Respondent

LYN BRITZ LIMITED
trading as HORIZON REAL ESTATE

Second Respondent

REASONS FOR JUDGMENT

I gave judgment earlier today and formally reserved my reasons on an application by the successful applicants in the principal proceedings: [2001] FMCA 84, for an order for costs in the sum of $13,600.77, being the applicants’ costs of the principal proceedings, plus costs thrown away and costs of this application. In the principal proceedings I awarded the applicants damages and made an order for costs in the applicants’ favour in the following terms:
2.The respondents are to pay the applicants’ costs of this application, including any reserved costs, assessed in accordance with the Federal Magistrates Court Rules and Schedule 1 to those Rules.
3.The Court certifies, pursuant to Rule 21.15, that it was reasonable for the applicants to employ an advocate to appear at the hearing on 13 June 2001 and 31 August 2001.
I gave judgment in the principal proceedings on 5 October 2001. At that time I roughly calculated the costs that would be payable pursuant to the order at approximately $9,000 plus counsel’s fees and disbursements. The applicants had sought costs on an indemnity basis but Ms Hay, for the applicants, intimated that that application would not be pursued in the light of the rough estimate of costs payable that I made. I did not, however, fix the amount of costs payable.
The present application is supported by the affidavit of Maria Man Yee Tsui, solicitor for the applicants, filed on 15 February 2002. Ms Tsui deposes relevantly as follows:
a)the principal application for relief under the Trade Practices Act 1974 (Cth) was filed on 27 October 2000;
b)on 9 May 2001 I gave directions in the matter preparatory to the trial;
c)the trial of the matter commenced on 13 June 2001 but had to be adjourned as the respondents were unready. I ordered the respondents to pay the applicants’ costs thrown away by reason of the adjournment. The hearing resumed on 31 August 2001, was completed on that day and judgment was reserved;
d)judgment was given in the applicants’ favour on 5 October 2001;
e)on 22 November 2001 the applicants’ solicitors wrote to the solicitors for the respondents setting out their costs and disbursements sought pursuant to the orders I made on 5 October 2001. The amount sought in that letter was $10,850.77. However, by letter dated 2 January 2002 the solicitors for the applicants amended their claim upwards to $13,360.77, having recalculated the amount the applicants’ solicitors consider they are entitled to pursuant to the costs order and presumably including costs thrown away on the first day of trial;
f)annexed to the affidavit is a schedule supporting the present claim for $13,600.77;
g) the respondents have not to date paid any of the costs claimed.
The present application is necessary because no payment of costs has been made pursuant to the previous costs orders made by the Court. The Federal Magistrates Court Rules 2001 (“the Federal Magistrates Court Rules”) do not make express provision for the enforcement of court orders but schedule 3 to those rules applies Order 37 of the Federal Court Rules (“the Federal Court Rules”). Under the general law, an order for costs in a sum certain may be recovered as a debt in a court of competent jurisdiction. However, a simple order for costs in which no amount is specified does not give rise to a debt. A debt arises if there is an agreement on the amount due or if the amount due is fixed by taxation.
The scale of costs set out in schedule 1 to the Federal Magistrates Court Rules is a fixed event based scale. In the circumstances, it is arguable that an award of costs made simply by reference to the scale gives rise to a debt if there is no room for debate as to the amount of costs that is due. Frequently, however, there will be room for debate, for example, where there is dispute over claimed disbursements or where, as here, an order has been made for costs thrown away. In these circumstances, the successful party requires some means of establishing what costs are due in order to pursue the unsuccessful litigant.
There is no provision for taxation of costs fixed by reference to the scale in schedule 1. The only provision for taxation is in rule 21.02(2)(c) under the Federal Court Rules. The Federal Court scale of costs applies in relation to any order for taxation in a general federal law proceeding: Suew Fong Lin v Official Trustee in Bankruptcy (No 2) [2002] FMCA 1. Where there is a dispute about what costs are payable under the Federal Magistrates Court scale it is open to the Court to refer the issue to a registrar pursuant to part 18 of the Federal Magistrates Court Rules but the issue can only be finally resolved by a court order. Such a court order would usually be for costs to be paid in a specific amount or in the form of a declaration that the successful party was entitled to costs in a certain amount for the purposes of the previous costs order.
In the present case the application is for an order for costs in a specific amount. It is necessary to consider whether the applicants are entitled to the amount of costs now sought in accordance with the scale under schedule 1. The applicants’ claim is detailed in the annexures to the affidavit of Ms Tsui. In particular the costs are detailed in attachment “C” to that affidavit. The applicants’ first claim stage 1A costs in the sum of $2,275. That claim was made on the basis that the directions hearing on 9 May 2001 involved the making of interim orders. The claim is based on a misunderstanding. Ordinarily, this Court proceeds on the basis that directions preparatory to the trial of a matter are given on the first court date. Ordinarily, only stage 1 costs are payable up to that first court date. The interim orders referred to in stage 1A are not ordinary procedural orders but substantive orders affecting the rights and liabilities of the parties. Accordingly, the applicants are only entitled to the sum of $1,820 up to the directions hearing on 9 May 2001. The applicants are also entitled to the daily hearing fee for that directions hearing and are entitled to the sum of $190 for a short mention.
Secondly, the applicants seek the sum of $6,145 for preparation for a two day trial under stage 5. That claim was made on the basis that this matter was heard over two days on 13 June 2001 and 31 August 2001. That claim is also based on a misunderstanding. The amount that a party is entitled to under stage 5 for preparation is fixed by reference of the length of hearing that a party prepared for, not the length of the hearing that actually transpired. If a party reasonably prepares for a two day hearing but a matter only runs one day then, prima facie, the party is still entitled to costs for preparation for two days. The party should not be penalised for the efficient conduct of the trial. Conversely, if a party only reasonably anticipated a hearing of one day then the party is not entitled to a preparation fee for two days even though the matter unexpectedly went into a second day. The position may be different if the additional day’s hearing clearly required additional preparation to be done. In this case the trial was listed for two days on 13 and 14 June 2001 and the applicants reasonably anticipated and prepared for a two day hearing. It is for that reason that the applicants are entitled to the sum of $6,145 under stage 5.
Next, the applicants claimed as a stage 6 amount the sum of $4,095 for attendance at the trial on 13 June 2001 and 31 August 2001 plus the sum of $190 for attending to take judgment on 5 October 2001. This claim also indicates a misunderstanding of the operation of the scale. The first day of the trial only ran for approximately one hour. At most, the applicants would be entitled to claim for a half day hearing for the first day. On the other hand, the applicants have only claimed a single fee of 150 per cent of the hearing fee. At trial Mr J Harris appeared for the applicants, instructed by solicitors who also properly attended. Under stage 6, the applicants are entitled to the daily hearing fee for the solicitors plus 150 per cent of the daily hearing fee for counsel, an advocacy certificate having been granted. Accordingly, the applicants are entitled to $2,050 for the solicitors and $3,075 for counsel under stage 6. The total amount payable under stage 6 is $5,125.
Finally, the applicants claim the following disbursements which are verified by receipts:
a)      filing fee $250
b)      company search $15
c)      valuation fee $350
d)      service fee $85
e)      photocopying (376 pages at 52 cents per copy) $195.52
I am satisfied that all of those disbursements are properly claimable and I will allow the amount of $895.52 for disbursements.
The applicants are also entitled to their costs thrown away by reason of the abandonment of the first day of the trial of the principal application on 13 June 2001. The applicants are entitled to receive the daily hearing fee for a half day hearing, plus the advocacy loading of 150 percent of that fee. The amount of costs thrown away is therefore $1,712.50.
In addition the applicants are entitled to their costs of making this present application. Mr Constance appeared for the respondents and did not consent to the orders sought but did not actively oppose them. In my view, the present proceeding is a proceeding to enforce an earlier costs order and is properly characterised as a stage 2 proceeding: that is, an interim or summary hearing as a discrete event. As this is the first court date for this application no stage 1 costs are payable and under stage 2 the applicants are entitled to the sum of $1,135 plus a daily hearing fee for a short mention of $190. No advocacy certificate is warranted for today’s hearing. The applicants also properly claim disbursements of $320.57 for this present application, comprising the court filing fee, service fee and photocopying. The applicants are therefore entitled to an order for costs in the sum of $1,655.57 for the present application.
I have ordered that the respondents pay to the applicants the sum of $17,543.59 in respect of costs and disbursements. It is appropriate that this amount be payable within a limited time so that the applicants can pursue the matter further promptly if necessary. I have therefore ordered that the amount payable be paid within 21 days.

I certify that the preceding thirteen (13) paragraphs are a true copy of the reasons for judgment of Driver FM

Associate:

Date: 22 March 2002