Yang v American International Assurance Company (Australia) Limited (No. 3)

[2008] FCA 1776

FEDERAL COURT OF AUSTRALIA

Yang v American International Assurance Company (Australia) Limited (No. 3) [2008] FCA 1776

JUN YANG and AULIAN ENTERPRISE PTY LIMITED v AMERICAN INTERNATIONAL ASSURANCE COMPANY (AUSTRALIA) LIMITED

NSD 97 of 2005

COWDROY J
26 NOVEMBER 2008
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 97 of 2005

BETWEEN:

JUN YANG
First Applicant

AULIAN ENTERPRISE PTY LIMITED
Second Applicant

AND: AMERICAN INTERNATIONAL ASSURANCE COMPANY (AUSTRALIA) LIMITED
Respondent

JUDGE:	COWDROY J
DATE OF ORDER:	26 NOVEMBER 2008
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The claim of the Respondent for an award of costs be referred to the Registrar for assessment.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 97 of 2005

BETWEEN:

JUN YANG
First Applicant

AULIAN ENTERPRISE PTY LIMITED
Second Applicant

AND: AMERICAN INTERNATIONAL ASSURANCE COMPANY (AUSTRALIA) LIMITED
Respondent

JUDGE:	COWDROY J
DATE:	26 NOVEMBER 2008
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. By notice of motion filed on 3 November 2008 the respondent, American International Assurance Company (Australia) Limited (‘AIA’), seeks an order for costs in the sum of $268,888 pursuant to O 62 r 4(2)(c) of the Federal Court Rules (Cth) (‘the Rules’) against the applicants, Mr Yang and Aulian Enterprise Pty Limited (‘Aulian’).

2. By amended notice of motion filed in Court on 26 November 2008 the amount claimed for costs was adjusted to $268,138.

3. Order 62 rule 4(2)(c) of the Rules provides:

   (2) Where the Court orders that costs be paid to any person, the Court may further order that as to the whole or any part of the costs specified in the order, instead of taxed costs, that person shall be entitled to:

   …

   (c)   a gross sum specified in the order;

   FACTS

4. The Court delivered judgment in the principal proceeding on 12 March 2008. On 16 April 2008 the Court ordered that AIA’s costs be paid by the applicants on a party-party basis up to 11 September 2007 and thereafter on an indemnity basis.

5. AIA’s application is supported by an affidavit of Matthew Glenn Foglia sworn on 3 November 2008 which provides details of the costs claimed together with an itemisation of the disbursements. Mr Foglia provided another affidavit sworn on 20 November 2008 which contains further details of the costs incurred by AIA.

6. Mr Yang filed an affidavit sworn on 22 November 2008. Its contents are largely unintelligible.

7. Mr Yang appeared before the Court today without legal representation but with the assistance of an interpreter. It is clear that Mr Yang and Aulian oppose the making of a gross sum order.

   FINDINGS

8. The Rules do not specify any criteria to be followed by a Court in determining whether to make an order under O 62 r 4(2)(c). In Dunstan v Human Rights and Equal Opportunity Commission (No 3) [2006] FCA 916 Mansfield J at [23] observed as follows:

   There is no particular characteristic of a case which must exist before a gross sum costs order can be made: Australasian Performing Rights Association Ltd v Marlin [1999] FCA 1006. It is a power which may be exercised whenever the particular circumstances of the case warrant it: Beach Petroleum NL v Johnson (1995) 57 FCR 119 (Beach); Harrison v Schipp [2002] NSWCA 213; (2002) 54 NSWLR 738.

9. At [24] his Honour considered the relevant factors for a Court in considering whether to make an order pursuant to O 62 r 4(2)(c) of the Rules. His Honour said:

   Factors which have been considered when exercising the discretion to make such an order include –

   § where the delay, expense and inconvenience of taxing costs in the normal manner would be unduly protracted or unduly expensive: Beach at 120; Charlick Trading Pty Ltd v Australian National Railways Commission [2001] FCA 629…; Foyster v Foyster Holdings (2003) 44 ACSR 705; and

   § where the financial capacity of the party liable to pay costs is such that the additional cost for taxation will impose a significant burden on the party in whose favour costs are ordered without real prospects of recovering those costs: Hadid v Lenfest Communications Inc [2000] FCA 628; Sparnon v Apand Pty Ltd (unreported, von Doussa J, 4 March 1998); Sony Entertainment (Australia) Ltd v Smith (2005) [215] ALR 788.

   There are other considerations to which the Court has had regard, but they are not said by any party to arise in the present matter.

10. The Court has been provided with details of the costs and disbursements relied upon by AIA in support of its application for a gross sum order. However, the Court is concerned that it lacks any independent means of assessment to enable it to determine whether the amounts claimed and the hours charged for various aspects of the work are correct. In consequence, although the Court does acknowledge that it has been provided with a scale of counsels’ fees applicable in this Court, the Court is unable to be satisfied that the costs sought are fair and reasonable.

11. In McDonald v Parnell Laboratories (Aust) and Another (No 2) (2007) 164 FCR 591 Buchanan J was requested to make a gross sum costs order but declined to do so. At 600 his Honour observed there was no reason why the assessment of costs should not receive the attention of a taxing officer who is accustomed to, and experienced in, dealing with such matters. The Court finds that the same considerations apply in this instance.

12. The Court is mindful of the evidence of Mr Foglia which indicates that AIA’s costs greatly exceed the amount claimed under O 62 r 4(2)(c) of the Rules, and that substantial discounts have been allowed by AIA in its claim for costs. However, the sum claimed by AIA remains substantial. In the absence of any independent mechanism for assessment, the Court is reluctant to make a costs order of such magnitude against unrepresented litigants. The Court finds that transparency requires that a Registrar of the Court be ordered to review and assess the claim of AIA for an award of costs in a gross sum.

13. The Court is aware that the preparation of a bill of costs may incur further expense. However, since AIA’s legal advisers have already prepared detailed costs as itemised in the affidavits in support of this application, the preparation of a bill suitable for taxation should not be onerous.

14. Accordingly the Court orders that the claim of AIA for an award of costs in a gross sum be referred to the Registrar for assessment.

I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Cowdroy.

Associate:

Dated:        10 December 2008

Counsel for the Applicants:	The Applicant appeared in person.
Solicitor for the Respondent:	Mr Foglia

Date of Hearing:	26 November 2008
Date of Judgment:	26 November 2008