Re Ludlam

The High Court of Australia, sitting as the Court of Disputed Returns, considered an application by the Commonwealth for a review of a taxation of costs concerning Mr Scott Ludlam. The dispute arose after the Commonwealth was ordered to pay Mr Ludlam's costs of a proceeding. Following a taxation of Mr Ludlam's bill of costs, the Taxing Officer allowed costs in the sum of $148,274.45. The Commonwealth had made an offer of $155,000 in full and final settlement of all costs, including the costs of taxation, which it contended complied with Rule 58.04 of the High Court Rules 2004 (Cth). The Commonwealth argued that because its offer exceeded the amount allowed on taxation, Mr Ludlam should not be awarded costs for steps taken in the taxation after the offer date, and that Mr Ludlam should bear some of the Commonwealth's costs of the taxation.

The legal issues before the Court were whether the Commonwealth's offer complied with Rule 58.04, and if so, what were the consequences for the award of costs of the taxation. Specifically, the Court had to determine if the offer of "$155,000 in full and final settlement of all costs... including the costs of and incidental to the taxation" constituted an offer of a "stated amount" for the costs of the party entitled to costs, and whether the total amount certified on taxation was less than this stated amount. Mr Ludlam contended that the offer was invalid because it was inclusive of taxation costs and therefore uncertain, or alternatively, that the stated amount was less than the total certified amount, meaning Rule 58.04 was not engaged.

The Court reasoned that Rule 58.04 requires a comparison between the "stated amount" offered and the "total amount certified". It held that the Commonwealth's offer of $155,000, expressed as inclusive of taxation costs, was an offer of a "stated amount" within the meaning of Rule 58.04. However, the Court found that the "total amount certified" for Mr Ludlam's costs was $171,670.14. For Rule 58.04 to be engaged, the stated amount offered must be greater than the total amount certified. As the Commonwealth's offer of $155,000 was less than the total certified amount of $171,670.14, the rule was not engaged. The Court clarified that the purpose of Rule 58.04 is to facilitate settlement before taxation is completed, and an offer must be sufficient to cover both the substantive costs and the costs of taxation. The Court noted that the Commonwealth could have offered a sum exceeding $171,670.14, or a sum slightly above the substantive costs plus the costs of taxation, to engage the rule.

The Court dismissed the Commonwealth's application for review of the taxation of costs and ordered that the Commonwealth pay Mr Ludlam's costs of the application.