Ritson v Commissioner of Police, New South Wales Police Force (No 2)
[2018] FCCA 1941
•26 July 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| RITSON v COMMISSIONER OF POLICE, NEW SOUTH WALES POLICE FORCE (No.2) | [2018] FCCA 1941 |
| Catchwords: BANKRUPTCY – Costs – application to set aside Bankruptcy Notice – application dismissed – whether the applicant pay the respondent’s costs on a lump sum basis – lump sum costs order made. |
| Legislation: Bankruptcy Act 1966 Federal Circuit Court (Bankruptcy) Rules 2016 (Cth), r.13.01(1) |
| Cases cited: Fewin Pty Ltd v Burke (No 3) [2017] FCA 693 |
| Applicant: | BRENDAN RITSON |
| Respondent: | COMMISSIONER OF POLICE, NEW SOUTH WALES POLICE FORCE |
| File Number: | SYG 1139 of 2017 |
| Judgment of: | Judge Smith |
| Hearing date: | Determined on the papers |
| Date of Last Submission: | 8 May 2018 |
| Delivered at: | Sydney |
| Delivered on: | 26 July 2018 |
REPRESENTATION
| The applicant appeared in person. |
| Counsel for the Respondent: | Mr P Afshar |
| Solicitors for the Respondent: | Coleman Greig |
ORDERS
The applicant is to pay the respondent’s costs fixed in the amount of $36,409.50, exclusive of GST.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1139 of 2017
| BRENDAN RITSON |
Applicant
And
| COMMISSIONER OF POLICE, NEW SOUTH WALES POLICE FORCE |
Respondent
REASONS FOR JUDGMENT
(As corrected)
The applicant commenced these proceedings on 12 April 2017 claiming that the Bankruptcy Notice served upon him was invalid and should be set aside and that the solicitors representing the respondent did not have the authority to do so. The Court delivered judgment in respect of the matter on 20 April 2018: Ritson v Commissioner of Police, New South Wales Police Force [2018] FCCA 916 (substantive judgment). These reasons are to be read together with the reasons for the substantive judgment.
Upon delivery of the substantive judgment, orders were made for the respondent and applicant to file and serve any affidavits and submissions concerning the question of costs by 27 April 2018 and 4 May 2018 respectively.
The parties’ submissions
The respondent seeks an order that the applicant pay his costs on a lump sum and ordinary basis. The respondent further seeks that in the event he is successful in obtaining a costs order and a sequestration order is made against the applicant, that any remaining balance of the costs order be treated as if it were the respondent petitioning creditor’s costs.
The respondent’s primary submission for seeking a costs order on a lump sum basis was that the applicant’s conduct in the proceedings indicate he would be likely to cause any taxation process to be protracted and expensive. The respondent also argued that the costs sought were reasonable in the circumstances and in support filed an affidavit outlining the legal fees he had incurred and the discounting that was applied.
The applicant without leave filed his submissions in reply outside of the timetable ordered by the Court. He argued that a costs order should not be made because he would be appealing the substantive judgment. The Court does not need to consider whether a losing party may appeal its decision before making an order for costs. The applicant also submitted that any costs order made against him should not be on a lump sum basis because the amount the respondent sought was excessive and unreasonable and that such a process would deny him the opportunity to closely scrutinise the costs claimed. He argued that, in the event the Court determined to make an order for lump sum costs, he should be heard at the costs hearing referred to in paragraph 4 of the Costs Practice Note (GPN-COSTS) issued by the Chief Justice of the Federal Court.
The relevant principles
The Court has the power to award costs under s.79 of the Federal Circuit Court of Australia Act 1999 (Cth). Further, r.13.01(1) of the Federal Circuit Court (Bankruptcy) Rules 2016 (Cth) provides that:
… a person who is entitled to costs in a proceeding to which the Bankruptcy Act applies is entitled to costs in accordance with Part 40 of the Federal Court Rules 2011 unless the Court otherwise orders.
Pursuant to r.40.02(b) of the Federal Court Rules 2011 (Cth), the entitled party to costs may apply for an order that costs be awarded in a lump sum.
As explained by Tamberlin J in Nine Films Television Pty Ltd v Ninox Television Ltd [2006] FCA 1046 at [3], the judicial discretion to award costs on a lump sum basis:
… is broad and unfettered by any specified considerations. Taxation of costs in a case such as the one before me is a lengthy, expensive and time-consuming process. The rule is directed to the avoidance of such expense, delay and protraction of litigation, and it may be appropriate to apply the rule in either a complex case or simple one: see Beach Petroleum NL Johnson (1995) 57 FCR 119 at 120.
In Fewin Pty Ltd v Burke (No 3) [2017] FCA 693, Markovic J at [7]-[14] summarised the principles and factors that may be considered in determining whether a lump sum costs order should be made. In brief, they include whether: the proceedings are simple or so complex that it would be inefficient in either circumstance for a taxation of costs; the financial capacity of the costs respondent causes it to be likely that the costs of taxation will be irrecoverable; or the conduct of one party would make the process of taxation too great an inconvenience on the other.
Her Honour went on to address the question of quantum and stated that the Court is “not required to undertake a line by line analysis of the costs claimed” as such an approach “would be contrary to the rationale behind the lump sum costs order process”. A broad brush approach should be adopted and so the Court may consider the evidence before it, observations it has of the proceedings and its own experience when assessing the quantum of a lump sum costs order: Fewin at [60]-[61].
Consideration
In the absence of special circumstances which may justify orders to the contrary; a party which has been successful in proceedings is ordinarily entitled to an award of costs: Plaintiff B9/2014 v Minister for Immigration & Border Protection (No 2) [2015] FCAFC 27 at [5]. As I have mentioned at [5] above, the only argument the applicant has put forward against the making of a costs order is that he intends to appeal the substantive judgment. I do not consider that to be a special circumstance or that there is any other reason for why the respondent should be deprived of its costs. An order will be made that the applicant pay the respondent’s costs and for the reasons that follow, that order will be made on a lump sum basis.
The applicant bears the onus of proof if he seeks to establish that the charges claimed by the respondent are unreasonable. As was the case in Fewin, the applicant here “had the benefit of evidence which sets out the hourly rates, tasks undertaken and time spent on particular items of work”: [63]. He was given the opportunity by way of orders made by the Court on 20 April 2018, to file and serve any affidavit in reply to the respondent’s affidavit and a short outline of submissions. Contrary to his final submission, and leaving aside the applicability of the Federal Court Practice Note on costs to proceedings in this Court, he has had the opportunity referred to in [4.2] of the Practice Note.
The applicant failed to submit any evidence and as I have noted at [5] above, filed his submissions in reply late and without leave. His submissions consisted of the bare assertion that the costs claimed by the respondent were “excessive and completely unreasonable”. Such a statement is insufficient to discharge the applicant’s onus of proof.
Throughout these proceedings the applicant has failed to adhere to orders of the Court by consistently filing late and without leave submissions, affidavits and further grounds of argument. In addition, the applicant in the substantive proceedings raised multiple grounds contending issues that either he, or any reasonable person would have known, not to be controversial. In those circumstances, I am not confident that the applicant’s conduct indicates that he would not cause a taxation process to be protracted and cumbersome for the respondent.
The respondent seeks a lump sum costs order of $36,409.50 (excl. GST) and in support of that amount has filed an affidavit which provides a costs summary. The respondent has applied a 10% discount on its solicitor’s professional fees on the basis that certain tasks may be deemed to have been able to be conducted by a paralegal. The respondent’s solicitor has also put on evidence of how she made a concerted effort to minimise his costs in these proceedings.
The lump sum claimed by the respondent did not include a charge for any work conducted by a paralegal or for the senior solicitor’s travel to and from Court. Approximately half of the work undertaken was by the senior solicitor for an hourly rate of $360 (excl. GST). Counsel for the respondent completed the balance of the work undertaken for an hourly rate significantly lower than that of the senior solicitor and so was extensively engaged in lieu of the senior solicitor.
In those circumstances, I accept that the costs sought by the respondent reflect a reasonable sum for the respondent’s ordinary costs.
However, I decline to make an order that, in the event that a sequestration order is made, these costs will form part of the petitioning creditor’s costs. As far as I am aware, there is no creditor’s petition and it cannot yet be known whether there will ever be one. Further, it remains a matter of speculation as to whether the respondent will be the creditor who files any petition.
Conclusion
I am satisfied, in the circumstances, that a lump sum costs award should be made in favour of the respondent in the amount of $36,409.50 (excl. GST).
I certify that the preceding nineteen (19) paragraphs are a true copy of the reasons for judgment of Judge Smith
Date: 26 July 2018
CORRECTIONS
Cover Sheet and orders: Page 2, Orders, delete “$34,409.50” and replace with “$36,409.50”.
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