Re Ludlam

[2019] HCATrans 112

[2019] HCATrans 112

IN THE HIGH COURT OF AUSTRALIA

SITTING AS THE COURT OF
DISPUTED RETURNS

Office of the Registry
  Canberra  No C12 of 2017

B e t w e e n -

IN THE MATTER OF QUESTIONS REFERRED TO THE COURT OF DISPUTED RETURNS PURSUANT TO SECTION 376 OF THE COMMONWEALTH ELECTORAL ACT 1918 (CTH) CONCERNING MR SCOTT LUDLAM

NETTLE J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON WEDNESDAY, 22 MAY 2019, AT 9.41 AM

Copyright in the High Court of Australia

MR P.G. LOVELL:   If your Honour pleases, I appear for the costs applicant, Mr Scott Ludlam.  (instructed by FitzGerald and Browne)

MR A.P. BERGER:   May it please the Court, I appear for the intervener costs respondent with the moving party on the summons before your Honour.  (instructed by Australian Government Solicitor)

HIS HONOUR:   Thank you both for the submissions, which have been helpful.  It strikes me, Mr Lovell, that perhaps the first and foremost consideration is whether or not the Commonwealth is correct in its contention that because the costs of the taxation are part of the costs the offer of $155,000 was in accordance with the rule because it was an offer for the costs.  Why is that not correct?

MR LOVELL:   We say, your Honour, that it is not correct for a variety of reasons.  First of all, notwithstanding the costs respondent’s outline of argument as to the relevant rule and the context of the rule, we in effect have a situation where the offer was made before the commencement of the taxation of costs.  The offer was made ‑ you may recall, your Honour, from the materials ‑ it was made on 6 July 2018 at approximately 6.00 pm.  That happened to be a Friday in the middle of – or at the beginning of winter in Hobart.  The costs respondent ought not have expected that that offer would have been attended to immediately, nor on the following Saturday or Sunday, in circumstances where, as you may recall from the materials, the costs lawyers were based in Melbourne and the costs applicant was based elsewhere, I understand, in Queensland at the time.

So the issue, as put by the costs applicant, goes very much not only as to the uncertainty of the wording of the offer in the context of rule 58.04 but also as to the timing and the opportunity for the costs applicant to respond.

HIS HONOUR:   Just pausing there, the latter – the timing and the opportunity to respond and the reasonableness given, as it were, would go to the exercise of the discretion, would it not?

MR LOVELL:   It would.

HIS HONOUR:   That would be a matter for the Registrar, as it were, proceeding on correct principle rather than if it be so on incorrect principle that the offer did not comply with the rule?

MR LOVELL:   That is correct.

HIS HONOUR:   What is it about the offer that does not comply with the rule if it be right to accept that the costs of the taxation are part of the costs?

MR LOVELL:   Well, the rule may in fact include the costs of the taxation in the manner proposed by the costs respondent in the outline of submissions but what I am putting to the Court is, from a practical point of view, the offer used words that the amount of $155,000 was offered in “full and final settlement of all costs of your client in these proceedings”.  I will just repeat that, “of all costs of your client in these proceedings, including the costs of and incidental to the taxation”.

The difficulty there for the costs applicant is what was in fact the costs of and incidental to the taxation, bearing in mind that the taxation had not in proper form commenced until three or four days later and whether those costs of and incidental to the taxation were somehow retrospective from the previous estimate of the taxing officer.

You may recall, your Honour, that what had happened – and, in my submission, the costs respondent was the architect of this particular predicament – as you may recall, your Honour, the costs applicant received substantive costs in the substantive constitutional proceeding.  There was an itemised bill drawn roughly – I will speak in round figures – in the vicinity of about $254,000 to $255,000.

The costs respondent requested that that bill be, in a sense, under one of the other rules ‑ I think it is rule 57.05 – that that itemised bill of costs be estimated by the taxing officer rather than a full proper taxation of costs; pursuant to the rules, that is fine.  Now, the taxing officer estimated the relevant costs in the vicinity of – just bear with me, I think it was around about $168,000 or thereabouts, I might be incorrect on that specific amount but in that region.

Now, that estimate was not objected to by the costs applicant.  It was objected to by the costs respondent.  So the costs respondent then said, in effect, to itself, we do not like this estimate, we are going to actually seek a proper taxation of costs and, of course, eventually a proper taxation of costs was listed to be heard on 10 July 2018.

Now, as it turned out – as you will recall, your Honour ‑ there was an offer made on 6 July but, nevertheless, on 10 July the parties are in a sense forced, in my submission, to go to a taxation of costs in circumstances where the costs applicant has not had an opportunity to consider or accept the offer because it was ‑ ‑ ‑

HIS HONOUR:   I have got that.  That is discretionary.  I do understand what you say about the unreasonableness of setting a time.  Just concentrate on why it is that that offer did not comply with the rule.

MR LOVELL:   Well, in my submission, your Honour, it did not comply with the rules because it was simply unclear in accordance with the rule as to what the costs of and incidental to the taxation actually were.

HIS HONOUR:   Or would be, I suppose.

MR LOVELL:   Or would be.

HIS HONOUR:   Yes.

MR LOVELL:   That is correct.  Because the costs applicant and his lawyer and the costs – the costs lawyers in Melbourne would not have known specifically what those costs amounted to or could be, nor could they ever know until there was an actual taxation of the costs of the taxation, so to speak, what amount would be allowed.

So, in essence, where the rule 58.04 says that the relevant offer is to be:

in writing to pay a stated amount for the costs of the party entitled to the costs –

In my submission, first of all, the rule is unclear as to what is meant by the phrase “a stated amount for the costs of the party entitled to the costs”, and whether those costs include costs of and incidental to the taxation, and if the rule is designed to mean that it does include the costs of and incidental to the taxation how are those costs intended to be quantified at the time the offer is made or within a reasonable time after the offer is made?

HIS HONOUR:   I suppose one makes a guess as to what the costs of the taxation will be, just as one makes a guess as to what he or she might recover if they proceed to verdict.

MR LOVELL:   That is correct.  Also in ‑ ‑ ‑

HIS HONOUR:   Just looking at that rule, the last few words after the comma “and if the total amount certified is less than the amount offered” tends to suggest, does it not, that the amount which is to be offered is an offer for the total amount which might otherwise be certified?

MR LOVELL:   It does, your Honour, and I cannot get away from that because there has to be a certification aspect eventually.

HIS HONOUR:   That total amount which is certified, it is agreed, does include the costs of the taxation?

MR LOVELL:   Well, I cannot get away from that, your Honour, it would include the costs of the taxation because the certification, of course, includes the costs of the taxation, as in fact did occur.

HIS HONOUR:   Yes.

MR LOVELL:   The difficulty is – and I guess I am dragging your Honour back towards more discretionary aspects – is that there was ‑ ‑ ‑

HIS HONOUR:   I do not think you need to at the moment, subject to what Mr Berger might say.  It does strike me as a touch unreasonable to serve an offer at six o’clock on a Friday in the middle of winter when the action is happening on Monday but I shall hear what he says about that.

MR LOVELL:   Yes.  Just on that point, your Honour, the costs respondent submissions at page 6 refers to a – or quotes from Elite Protective Personnel Pty Ltd – this is at page 6 of the costs respondent’s outline of submissions, paragraph 26d.  You will see there it – and I will read from the quote:

If a party in receipt of an offer wishes to know how far the sum offered will go in meeting its costs up to that time, all it has to do is ask its lawyers.

And his Honour there goes on to say about modern communication in effect.

Well, that was impossible, in my submission, in the circumstances of this particular case before you today because as was stated in the costs applicant’s submissions in response – and this is at page 112 and 113 of what I might describe as the Gatehouse affidavit – the costs applicant focused specifically on the issue of that quote from Elite Protective Personnel.  I will not read it all out to you, your Honour, because, of course, you have that before you, but one of the things that was said in the costs applicant’s submissions is that – at paragraph 25, this is at the bottom of page 112 of the affidavit:

It is submitted that paragraphs 32 & 33 of the CR Submissions must be rejected in that they conflate two sets of costs, as if one set.  A bill of costs will typically set out the claimed costs of the successful party concerning a particular substantive proceeding which may have taken place over months or years –

And I have given some examples there:

Up to a point, such a bill will also typically claim certain known costs of the Taxation –

That is often within the bill itself ‑ ‑ ‑

HIS HONOUR:   Yes.

MR LOVELL:   And then I have given some examples and then I have gone on to say:

The bill may also include some estimated taxation costs on the basis that a generic Taxation will actually occur in a straight‑forward manner (e.g. for a full day).  However, even those taxation costs will remain unquantified pending the completion of the matter by Taxation or by agreement.

HIS HONOUR:   I follow that.  Tell me, in your submission, what would one have to do in order to comply with rule 58.04?  How would the offer be phrased?

MR LOVELL:   In my submission, it ought be phrased precisely as was suggested by the taxing officer in her – what I have described as her primary decision.  This is at page 147 of the Gatehouse affidavit and I am reading from roughly page 9 of page 147 of the Gatehouse affidavit.

HIS HONOUR:   Thank you.  Yes.

MR LOVELL:   I am commencing with the words “At the time” at roughly page 9.

HIS HONOUR:   Yes, I have those.  Thank you.

MR LOVELL:   Line 9, I mean:

At the time the offer was made, the Costs Applicant could have made an assessment of the costs he could claim, but he would not have been certain as to which of those costs the Costs Respondent would object ‑

That goes back to what I was saying earlier, your Honour.

HIS HONOUR:   Yes.

MR LOVELL:  

and which of them would be allowed in my assessment.  This element of uncertainty meant, in my opinion, that the offer of $155,000 inclusive of the costs of and incidental to the taxation was not an offer of a “stated amount”.  In order to comply with Rule 58.04, the offer should have been made for a specific amount plus the costs of and incidental to the taxation.

In my submission, that is the appropriate answer to the question your Honour put to me because then the costs applicant would have some certainty in comparing, or trying to compare apples with apples.  There was a bill of costs which had been estimated at a particular figure and the costs respondent, if it had properly worded its offer, would have enabled the costs applicant to say, okay, we are going to get $155,000 for the bill of costs and then there is – if it said plus the costs of and incidental to the taxation, then the costs applicant, without even needing to ascertain what those costs might have been, could still accept the offer.

HIS HONOUR:   I understand.  How do you fit that analysis with the last words of rule 58.04 in the chapeau and if the total amount certified is less than the amount offered?  How does one do it?  Give me the way to do it.

MR LOVELL:   Well, if then the total amount certified is less than the amount offered the comparison would be comparing $155,000 with the amount certified.

HIS HONOUR:   That is what he has done here.  They did compare $155,000 with the amount certified because the amount certified included the costs of taxation.

MR LOVELL:   Well, the amount certified did include the costs of the taxation but if it was $155,000 plus the costs of the taxation what I am saying, your Honour, is that the costs applicant could say, okay, our bill has been estimated at 168‑ish or that rough figure, they are offering 155, will we beat that amount in the bill or not, and we can also claim separately the costs of the taxation, whatever they might be, in the future.  As it turned out – and your Honour will appreciate this, I am sure – the costs respondent’s overall offer in the context of the costs respondent’s submissions bettered the return, so to speak, of the result by approximately – I think it was about $491.

HIS HONOUR:   It was finely pitched.

MR LOVELL:   Yes, $491.45.

HIS HONOUR:   Yes.

MR LOVELL:   In my submission – just if you might permit me, your Honour, to go back to what I was saying earlier about the costs respondent being the architect of its own predicament – the costs respondent has caused the parties, the respondent itself and the costs applicant, a considerable amount of costs by seeking to trigger the taxation of costs of the taxing officer’s estimate where the amount gained, so to speak, prima facie, is reducing an estimate from approximately $168,000 to approximately $148,000 or thereabouts.

So certainly the costs respondent can wave a flag and say, okay, we are $20,000 better off but that is overlooking, in my submission, the fact that that strategy has in effect cost the costs applicant $30,000‑odd ‑ $31,000 to $32,000.  That was not the amount allowed on the taxation ‑ of the taxation costs but that is what was incurred ‑ $30,000 to $31,000 plus the costs respondent’s own internal costs, whatever they might be ‑ I would be guessing but they could be $20,000 or $30,000 or $15,000, who knows – to achieve an overall result of lowering the costs by $20,000 roughly.

Since then, as you will appreciate from the submissions that the costs applicant put forward to the taxing officer during the course of this process, more costs have been generated; the taxing officer as you know, your Honour, has endorsed the views of the costs applicant as to uncertainty ‑ whether offers of compromise ought be inclusive of costs or not inclusive of costs she did not determine one way or the other; the taxing officer has expressly said that she is not making any determination whether that is good, bad or indifferent, that Calderbank offers are inclusive of costs, but nevertheless confirmed by her primary reasons, as I have described in my – that is the jargon I have used in my own submissions – by her primary decision that she has supported the views and the stance of the costs applicant.

Thereafter, the costs respondent has challenged the primary decision and has received in response from the taxing officer what I have referred to as the reconsideration decision where, in my submission, the taxing officer has carefully gone through the views and submissions put by the costs respondent and in effect not accepted them and confirmed her previous primary decision, briefly speaking, for the reasons she has and has then focused on the aspects of discretion which my submissions also do.

HIS HONOUR:   Mr Lovell, I understand the force of those submissions, if I may say so.  My only concern is to ascertain whether the taxing officer was correct in her interpretation of the rule.  If she was, then subject to anything Mr Berger might say, I see no reason to doubt the exercise of her discretion.  If she was incorrect as to the construction of the rule, then technically but I think inevitably, it would have to be said that she proceeded upon a wrong principle and the matter would need to be remitted to her for the re‑exercise of her discretion with proper regard to the correct construction of the rule.  I certainly, myself, would not be disposed to be entering into a re‑exercise of the discretion; it is a matter for the taxing officer.

MR LOVELL:   No, I understand that, your Honour, and you might recall at the end of my submissions I have actually indicated whether the matter might need to be remitted back to the taxing officer because there are other aspects also ‑ ‑ ‑

HIS HONOUR:   There are any number of other aspects, I appreciate that.  It is not just a matter of the construction of the rule, but the construction of the rule is critical.

MR LOVELL:   Yes.  Well, in my submission, the – just bear with me, your Honour – I do not take any issue with the costs respondent’s principles as to statutory construction which the costs respondent has set out in his submissions on page 3.

HIS HONOUR:   Yes.

MR LOVELL:   It is what I would say would be relatively stock standard, so to speak.

HIS HONOUR:   Yes.

MR LOVELL:   But I still say that the statutory text, as it is referred to by the costs respondent, is one where it may not necessarily include the costs of the taxation or the taxation costs – this is rule 58.04 – in the particular circumstances of this case where the taxation – first of all, the taxation has not commenced so in my submission that aspect – the costs respondent’s submissions can be distinguished from the actual circumstance in this case.  So there is no taxation of costs on foot at the time the offer is made.  The offer, as you will recall, your Honour, says that it includes the costs of and incidental to the taxation.  So it is difficult, in my submission, for the applicant in fact to determine a meaning of what is meant in the offer by “of and incidental to the taxation”.

HIS HONOUR:   Well, that is a term of art, is it not, costs of and incidental to a proceeding ‑ ‑ ‑

MR LOVELL:   It is a term of art but in this particular circumstance there is – let us say there is no proceeding on foot, in a taxation sense.  There has been the estimate, there has been a request that the costs be taxed in any event, the matter has been set down for a taxation commencing on 10 July, but at the time the offer is received there is no taxation on foot.  The difficulty then is what is meant by “of and incidental to the taxation” in those circumstances at that time?

Now, the costs respondent’s submissions paint a picture – which I do not necessarily disagree with, your Honour – that let us assume there was a taxation of costs on foot and it had been going for three days and it was part‑heard and likely to go for another three days, then the sorts of examples and the context that the costs respondent has alluded to in the costs respondent’s submissions would necessarily include the costs of the taxation for the three‑day period.  But what I am emphasising here, your Honour, in this particular case, that was not the point, there was no commencement of taxation at that time.

At the time of considering – well, at the time of receiving the offer, which technically was not really received until Monday morning, it was only open till 4.00 pm for acceptance that same day.  Unlike Elite Personnel and the quotes made by the costs respondent referring to Elite Personnel, the costs applicant was not in a position to ring up and say, “Look, hang on, can you give us a few more days to consider your offer and we will get back to you” because the taxation was on the next morning at 10 o’clock in rooms not far from here which I personally attended myself.

So, in my submission, given the nature of the timing of this matter, the offer ‑ the non‑commencement of the taxation and an offer that says it includes the costs of and incidental to the taxation made the offer uncertain in the context of rule 58.04.

I might say, just for clarification, your Honour, just because taxation has not commenced proper on a particular day, the listed day, does not necessarily mean that there were not costs of and incidental to the taxation because such taxation costs can be generated in – I guess you could say retrospectively so to speak depending on when briefs were issued to counsel, when itemised bills were drawn ‑ of the taxation costs, not the substantive constitutional costs ‑ so there is some retrospective costs – I will say that again.

There are some retrospective costs, even though the actual taxation day is starting on the 10th, but they are so ephemeral and esoteric as for anyone to know what they were, how they would be quantified at the time the offer was received and ought be accepted or refused by 4.00 pm on the Monday, and if those costs did exist whether the taxing officer would allow them and, if so, to what degree?

HIS HONOUR:   I see.

MR LOVELL:   So, in my submission, although I do not wholly disagree with the analysis of the costs respondent’s rule 58.04 the statutory context and the – or the statutory context, I do disagree with the practical consequences of the parties competing in construction in the context of this particular matter because of the timing of the offer because their taxation proper had not commenced and so on, your Honour.

HIS HONOUR:   Thank you, Mr Lovell.

MR LOVELL:   Does your Honour have any other questions at all?

HIS HONOUR:   No, thank you.

MR LOVELL:   I might just for the sake of clarification say that even though I have not spoken to the costs applicant’s initial submissions and responding submissions which form part of the Gatehouse affidavit, I do implore your Honour to take those into account.  I am obviously not going to read them and reiterate the extracts from the case authorities which I have provided to my learned friend.

HIS HONOUR:   Thank you.

MR LOVELL:   Thank you, your Honour.

HIS HONOUR:   Mr Berger.

MR BERGER:   Thank you, your Honour.  In relation to discretion, we accept that it is a matter that should be for the taxing officer to re‑exercise proceeding on correct principle rather than what we submit is incorrect construction and therefore application of rule 58.04, and we accept that there will be a range of matters, including those referred to in our written submissions in paragraph 26 that will be relevant to that re‑exercise of discretion but they are matters for the taxing officer, rather than your Honour, is our position today.

HIS HONOUR:   It is all about the construction of the rule, is it not?

MR BERGER:   Yes, your Honour.  In relation to that there is just two points I make in response to what my learned friend submitted this morning.  The first relates to the submission that the offer was uncertain because of what could be included in the phrase “costs of and incidental to taxation”.  We say three things in response to that, your Honour.  Firstly, as your Honour observed, it is a term of art which if one looks at the authorities it is clear that it is frequently used in the context of Calderbank offers or offers made in an attempt to resolve proceedings.

It is understood in that context to refer to what are companies or is incidental to or what is a result of something.  So that there is no doubt, for instance, if one is talking about a statement of claim, that the costs incurred in drafting that statement of claim are encompassed, and in the case of costs of and incidental to taxation it avoids any suggestion that you are only referring to the narrow costs associated with coming before the taxing officer and attending the taxation of costs and includes what is incidental to that such as drafting the bill of costs, preparing for the taxation, advising the client of what the outcome was and matters of that kind.  It is what surrounds the taxation, not just the very taxation itself.

Secondly, your Honour, we submit that it is entirely appropriate to phrase an offer in that way because that is precisely what the rule itself contemplates.  If your Honour looks at rule 58.04(b), your Honour will see the reference to what may flow from an offer made pursuant rule 58 and that includes a discretion of the taxing officer to:

order the party entitled to the costs or the solicitor who prepared the bill to pay some or all of the costs of or incidental to the taxation –

So the rule itself actually uses that term of art and it is for that reason we submit a further reason why it can be phrased in that way.

Thirdly, your Honour, we submit that the costs applicant can be taken to know what that phrase meant for two reasons.  If your Honour turns to page 79 of the Gatehouse affidavit your Honour will see there the costs applicant response to the letter of offer of 6 July and it does not seek any clarification, which it could have, as to what is meant by costs of and incidental to taxation.  But further, and more significantly, the response itself uses that very phrase.  Your Honour will see that:

The Costs Applicant offers to accept $200,000.00 in full and final settlement of its costs in these proceedings, including the costs of and incidental to the taxation.

So, for those reasons, your Honour, we suggest that the contention that the offer was invalid because of some uncertainty surrounding the use of the phrase “of and incidental to taxation” rings somewhat hollow.

Secondly, your Honour, it was submitted that the offer was uncertain in some way because the costs applicant would not know precisely what costs they would get or what would be allowed and the taxing officer seemed to have that same concern because the objections of the costs respondent had not been made then and the costs applicant would not know precisely what costs of and incidental to taxation they might receive.

We accept, of course, that the costs applicant was not in a position to work out with mathematical or scientific precision to the last dollar or cent exactly what costs they would receive but very few offerees of a settlement offer, whether made under the relevant rules of court or in accordance with the Calderbank principle, is in a position to do so.  In fact, ordinarily, an offeree is in a far worse position than the costs applicant was in this case because if you are the subject of an offer of compromise in a damages claim all sorts of unknowns arise; you will not know how your witnesses will stack up, how the court might approach the relevant legal principles, all sorts of variables arise and very few offerees can know precisely what damages they will receive and what costs they will receive.

But here we are only talking about the costs that the costs applicant was entitled to receive and they were in a position to make a good guess, as your Honour suggested, of what those costs might be.  And the comments of Justice Basten set out in our submissions to the effect that if you want to know what your costs might be you can ask your solicitor do apply in this case and, in any event, we submit that that is an issue that goes to discretion rather than the proper construction and application of the rule because the amount offered was for a stated amount, namely, $155,000, and the costs applicant was in a position to know exactly what was being offered and had to make an informed decision whether to accept it or reject it.  They chose to reject it, they took that risk and it did not pay off.

So what flows from that, we submit, is two things.  One, rule 58.04(a) flows automatically because it is not phrased in the terms of discretion.  And, secondly, the taxing officer should exercise their discretion pursuant to rule 58.04(b), having properly construed and applied the rule to the offer that was made.

HIS HONOUR:   One thing that really strikes me as odd about this rule is that it provides for no minimum time for which the offer must be open.

MR BERGER:   It does not, your Honour, and that is ‑ ‑ ‑

HIS HONOUR:   It is very odd, is it not?

MR BERGER:   ‑ ‑ ‑ a matter that could go to discretion as to the ‑ ‑ ‑

HIS HONOUR:   As you say, there is no discretion in relation to paragraph (a).

MR BERGER:   No, your Honour.  One could perhaps read into the rule a limitation so that if, for example, the offer was left open for a minute it did not truly constitute an offer or something – there may be construction surrounding what is an offer ‑ ‑ ‑

HIS HONOUR:   It is implicit in a Calderbank offer that it be open at least for a reasonable time, is it not, otherwise it would not be regarded as an offer capable of acceptance?

MR BERGER:   Yes, your Honour.

HIS HONOUR:   I mean, is one to read into this rule a requirement that it be open for a reasonable time otherwise, as you say, you could an offer open for 30 seconds and paragraph (a) would then be attracted, which could hardly be expected or intended.

MR BERGER:   No, your Honour, we accept that, but here we say it clearly was open for a reasonable time, particularly having regard to the response.  If the costs applicant had said, I am sorry, we do not have sufficient time to get instructions or to consider this properly, or we need further time, then we might be confronting a different scenario, but they did not do that, they responded in clear terms rejecting the offer and making a counteroffer which was far in excess of what they ultimately achieved.  So having chosen to respond in that way we submit they cannot now submit that the offer was not open for a reasonable period of time because that conduct ‑ ‑ ‑

HIS HONOUR:   That question just does not arise on this case.

MR BERGER:   Yes, your Honour.

HIS HONOUR:   I see.

MR BERGER:   Finally, your Honour, in relation to the insightful question your Honour asked of how the offer should be phrased and the response given by my learned friend and the views of the taxing officer set out at page 147, we endorse your Honour’s suggestion that the suggested wording simply does not fit within rule 58.04.

We further submit that the distinction that has been drawn by the costs applicant and the taxing officer, namely, between the costs of the substantive proceedings and the costs of and incidental to the taxation, is an artificial construct which finds no support in the text or statutory context of either rule 58.04 or the rules more broadly, and including, as we have referred to in our submissions, the High Court of Australia (Fees) Regulation 2012 because if your Honour looks at those and the items referred to in our submissions your Honour will see that those fees provide for both costs of substantive proceedings and the costs of and incidental to taxation.

Those regulations treat both in the same way, namely, as costs that a party who receives a costs order in their favour can receive and can be the subject of taxation.  The rules equally treat them in the same way, they do not draw a distinction, and in this very case they were treated in the same way because they were both the subject of bills of costs, they were both subject of assessment by the taxing officer and they were both incorporated into the decision of the taxing officer and the certificate of taxation that subsequently issued.  So to draw this artificial construct and separate out ineffectively two species of costs is something that simply is not in accordance with the text or the statutory context or its evident purpose.

Unless there is anything further, your Honour, those are our submissions.

HIS HONOUR:   No, thank you, Mr Berger.  Anything in reply, Mr Lovell?

MR LOVELL:   Yes, just briefly, your Honour.  My learned friend has taken your Honour to page 79 of the Gatehouse affidavits which does show the rejection of the costs respondent’s offer and making a counteroffer and my learned friend mentioned that the counteroffer refers to the words “including the costs of and incidental to the taxation”.  But in the context of rule 58.04 that rule only applies to an offer that is made by the party liable to pay the costs.

Here, notwithstanding the costs applicant was not in a position to ascertain the – let us call it the true value of the costs respondent’s offer – here, the costs applicant – it is the costs applicant here that is offering to accept a certain amount of money, being $200,000 in full and final settlement of its costs in these proceedings, including the costs of and incidental to the taxation.

So it is easy – if I can use that word – for the costs applicant to say, with some degree of comfort, give me X dollars for everything, but that is quite different from what rule 58.04 says when a plaintiff ‑ the person “liable to pay the costs” is in effect saying, we are giving you $155,000 but including the costs of and incidental to the taxation which, in the circumstances of this particular case ‑ which I keep emphasising, your Honour – was unable to be quantified with reasonable precision for acceptance purposes.

So what I am saying in effect is just because the costs applicant’s counteroffer used the words “costs of and incidental to the taxation” does not mean that somehow the costs applicant is accepting the costs respondent’s position as put to this Court in the context of rule 58.04.

Other than that, your Honour, I do not have anything further to say, unless you have any questions.

HIS HONOUR:   No, thank you, Mr Lovell.

Gentlemen, despite the small amount involved in this matter, I expect the matter of construction of the rule is one of some importance, therefore I propose to reserve my decision.  I will adjourn now.

AT 10.27 AM THE MATTER WAS ADJOURNED