TFM Epping Land Pty Ltd v Decon Australia Pty Ltd

Case [2020] FCA 955

FEDERAL COURT OF AUSTRALIA

TFM Epping Land Pty Ltd v Decon Australia Pty Ltd [2020] FCA 955

File number: NSD 1834 of 2019
Judge: MARKOVIC J
Date of judgment: 8 July 2020
Catchwords: COSTS – application for quantification of costs thrown away by reason of an adjournment of the hearing payable forthwith and in a lump sum – whether costs claimed are costs thrown away – whether costs can be properly quantified based on the evidence – application allowed  
Legislation:

Federal Court of Australia Act 1976 (Cth), s 37M

Federal Court Rules 2011 (Cth), Sch 3

Cases cited:

Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119

Fewin Pty Ltd v Burke (No 3) [2017] FCA 693

Hudson v Sigalla (No 2) [2017] FCA 339

Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd (No 3) [2018] NSWCA 50

South Western Sydney Local Health District v Gould (No 2) [2018] NSWCA 160

Date of hearing: 1-2 June 2020
Date of last submissions: 3 June 2020 (Defendant)
9 June 2020 (Plaintiffs)
Registry: New South Wales
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Category: Catchwords
Number of paragraphs: 41
Counsel for the Plaintiffs: Mr M Christie SC and Mr D Hume
Solicitor for the Plaintiffs: Dentons Australia
Counsel for the Defendant: Mr I Roberts SC and Mr D Byrne
Solicitor for the Defendant: Piper Alderman

ORDERS

NSD 1834 of 2019
BETWEEN:

TFM EPPING LAND PTY LTD (ACN 605 600 253)

First Plaintiff

KATOOMBA RESIDENCE INVESTMENTS PTY LTD (ACN 606 106 405)

Second Plaintiff
AND:

DECON AUSTRALIA PTY LTD (ACN 078 021 333)

Defendant

JUDGE:

MARKOVIC J

DATE OF ORDER:

8 JULY 2020

THE COURT ORDERS THAT:

1.The costs payable to the defendant pursuant to Order 2 made on 2 June 2020 are quantified in the sum of $13,034 excluding GST.

2.Each party pay their own costs of this application.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

MARKOVIC J:

  1. This proceeding concerns an application made by TFM Epping Land Pty Ltd (TFM) and Katoomba Residence Investment Pty Ltd (Katoomba Residence) (together, the plaintiffs) pursuant to s 459G of the Corporations Act 2001 (Cth) to set aside a statutory demand served by Decon Australia Pty Ltd (Decon), the defendant, on Katoomba Residence. 

  2. The proceeding was listed for hearing for two days commencing on 1 June 2020.  However, on the morning of 1 June 2020 the plaintiffs made an application for an adjournment of the hearing.  The reasons for making that application are not presently relevant.  It is sufficient to note that the application for an adjournment was acceded to, over the opposition of Decon, and the proceeding adjourned for hearing to 24 June 2020. 

  3. Although the substantive argument on the adjournment application was made on 1 June 2020, at the conclusion of the argument and after expressing my views, I adjourned the proceeding to…

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Details
AGLC
TFM Epping Land Pty Ltd v Decon Australia Pty Ltd [2020] FCA 955
Case
[2020] FCA 955
Decision Date

CaseChat Overview and Summary

In the Federal Court of Australia, the case of TFM Epping Land Pty Ltd v Decon Australia Pty Ltd involved a dispute regarding the quantification of costs thrown away due to an adjournment of a hearing. Decon Australia Pty Ltd sought an order to quantify its costs thrown away by reason of the adjournment, claiming $27,492 excluding GST, while TFM Epping Land Pty Ltd and Katoomba Residence opposed the claim. The legal issues centred on whether the costs claimed were indeed costs thrown away and whether they could be properly quantified based on the evidence provided. Decon's evidence included an affidavit from its solicitors detailing the costs incurred, which were broken down into solicitors’ fees and counsel fees. The plaintiffs argued that not all the costs claimed were thrown away by the adjournment, pointing out that some of the work could have been done in chambers or that Decon's counsel had taken on other work.

The court evaluated the evidence and submissions from both parties and determined that an appropriate lump sum for the costs thrown away by the adjournment should be $13,034 excluding GST. The court noted that while Decon had set aside two days for the hearing, the plaintiffs did not notify Decon of the adjournment until the evening before the hearing. The court found that the plaintiffs had not provided sufficient evidence to support the full amount claimed, and thus reduced the quantification of the costs thrown away. The court also ordered that each party bear their own costs of the application, finding that while TFM and Katoomba had achieved some success in reducing the costs claimed, it was not appropriate to award them their costs in full.

Orders

Orders of the court

1. The costs payable to the defendant pursuant to Order 2 made on 2 June 2020 are quantified in the sum of $13,034 excluding GST.

2. Each party pay their own costs of this application.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

As a result Decon seeks its lump sum costs quantified in the sum of $27,492 excluding GST. TFM and Katoomba Residence oppose the making of an order quantifying Decon’s costs in that amount. DECON’S EVIDENCE OF QUANTIFICATION OF ITS COSTS Decon relies on an affidavit affirmed by Timothy John Coleman, a partner of Piper Alderman, its solicitors. Mr Coleman’s affidavit is expressed to be a costs summary provided in accordance with the 2 June Orders, and, I infer, in accordance with the Court’s Costs Practice Note (GPN-Costs) (Costs PN). As noted above, Decon seeks a lump sum costs order in the sum of $27,492 excluding GST, made up of solicitors’ fees of $8,112 and disbursements comprising junior counsel’s fees of $5,880 and senior counsel’s fees of $13,500. Mr Coleman sets out a summary of the categories of work performed including an estimate, in percentage terms, of the proportion that each category constitutes of the total amount claimed. Mr Coleman also sets out a summary in respect of each solicitor who performed the work the subject of the claim by reference to their respective hourly rates, the total hours worked, the total charges made and the percentage claimed for each solicitor of the lump sum. In addition Mr Coleman annexes to his affidavit a narrative of the work undertaken by each solicitor and copies of the invoices issued by counsel briefed to appear in the matter. Mr Coleman notes that his hourly rate has been reduced from $670 per hour to $650 per hour in order to comply with the Court’s scale in Sch 3 to the Federal Court Rules 2011 (Cth) and that senior counsel’s fees have been reduced so that they come within the National Guide to Counsel Fees. Counsel fees constitute approximately 70% of the amount claimed.PARTIES’ SUBMISSIONS Decon submits that the appropriate lump sum for its costs is $27,492 excluding GST and that those costs are reasonable. To the extent that an issue may arise as to whether Decon’s costs of 2 June 2020, the proposed second day of the hearing, are “costs thrown away by reason of the adjournment”, Decon submits that the proceeding had been set down for hearing with an estimate of two days since 21 February 2020 and at no time did the plaintiffs assert that it would take less than two days. Decon says that once it was set down its counsel set aside those two days. Decon observes, and it is not in dispute, that the plaintiffs did not notify Decon of the adjournment application until the evening before the hearing. Decon says that the following then occurred:(1)on 1 June 2020, when the adjournment application was made, it was required to appear; (2)on 1 June 2020, the Court adjourned the proceeding to the following day to allow the plaintiffs to make inquiries as to when the New South Wales Court of Appeal could hear their application for leave to appeal and appeal (Appeal Proceeding) and the Court indicated that if the appeal could not be heard within two weeks a further adjournment may not be granted, with the implication that the matter would proceed on 2 June 2020; and(3)upon hearing on 2 June 2020 that the Appeal Proceeding could be heard on 16 June 2020, the Court adjourned the hearing to 24 June 2020.

Decision

Reasons for decision

It follows that an order should be made that Decon’s costs thrown away by reason of the adjournment should be quantified in the sum of $13,034 excluding GST.CONCLUSION In light of the matters set out above, I will make an order that the costs payable pursuant to Order 2 made on 2 June 2020 be quantified in the sum of $13,034 excluding GST. The plaintiffs seek their costs of this application. However, while they have achieved some success in reducing the costs claimed, the more appropriate order, in the circumstances, is that each party pay its own costs of Decon’s application for quantification of its costs. I will make orders accordingly.

Ratio Decidendi

Legal Principle Established

The plaintiffs submit that Decon is entitled to its costs thrown away on an ordinary basis and that Decon’s evidence and submissions do not grapple with the limitations on its entitlement. They contend that:(1)Decon seeks counsel fees for the whole of 2 June 2020, the second day of the hearing, which are not costs thrown away by reason of the adjournment because the parties returned on 2 June 2020 substantially because Decon’s senior counsel requested, and the Court agreed, that the parties should deal with objections. The plaintiffs note that upon commencement of the hearing, Decon’s senior counsel indicated that he now thought it was appropriate to defer consideration of the objections, a view which was not communicated to the plaintiffs prior to the hearing. The plaintiffs say that if the only issue to be dealt with was the fixing of the hearing date for the resumed hearing, that could easily have been dealt with in chambers without the need for an appearance;(2)even if some of the costs incurred on 2 June 2020 are costs thrown away, there is no basis for awarding the entirety of the costs of that day. The plaintiffs say that the hearing was complete by approximately 10.30 am, no substantial preparation time could have been incurred for that day, objections had been allocated to Decon’s junior counsel and, in any event, work on objections is not costs thrown away;(3)there is no evidence that Decon’s counsel were prevented from taking new work on 1 and 2 June 2020 nor is there evidence that Decon’s legal representatives solely worked on the adjourned application on 2 June 2020 and, if they did, it can only be because they were preparing for the resumed hearing which would not be costs thrown away;(4)insofar as Decon contends that “at no time did the plaintiffs assert that [the hearing] would take less than the two days allocated”, the plaintiffs say that on the morning of 1 June 2020 Decon’s counsel informed the Court and the plaintiffs that Decon did not require the plaintiffs’ witnesses for cross-examination and, in that context, one day was likely to be sufficient. The plaintiffs say that submission was made without notice to them, they had previously been informed that their witnesses were required for cross-examination and, in those circumstances, it is difficult to see how the plaintiffs can be criticised for not communicating a revised hearing estimate;(5)Decon seeks counsel fees for the whole of 1 June 2020 but on that day the hearing was completed by approximately 12.30 pm. There is no evidence that Decon’s legal representatives were prevented from taking on further work that day and did not in fact do so. The plaintiffs note that the Court is aware from the record of communications with it that further work was done by Decon on the afternoon of 1 June 2020 on objections, which is not costs thrown away;(6)Decon seeks one hour (per counsel) of costs incurred on 31 May 2020 but the evidence does not establish that its senior counsel did one hour of work on 31 May 2020 on the adjournment application. The plaintiffs note that each of senior and junior counsel claim time for reviewing an affidavit relating to the adjournment on 31 May 2020 but no affidavit relating to the adjournment was served on that day;(7)the timesheet provided for Decon’s solicitors does not address itself to costs thrown away nor to the reasonableness of the costs incurred; (8)the ambit nature of Decon’s claim is evidenced by its own documents. The plaintiffs note that on the morning of 2 June 2020, before the hearing, Decon sent them a request for payment of costs thrown away, which calculated those costs at $32,017, while now the claim is for $27,492; and(9)Decon does not adduce evidence which would give the Court comfort that the amount it seeks reflects the amount it would obtain on an assessment. The plaintiffs note that there is no opinion evidence identifying what a likely assessed amount would be. Rather Decon’s submissions assume that, on assessment, it would receive 100% of its counsels’ and solicitors’ fees reduced only so far as its counsel have charged above the National Guide to Counsel Fees and its solicitors have charged above the Court’s scale. The plaintiffs submit that nothing in the evidence makes that assumption good. CONSIDERATION