Alhalek v Quintiliani trading as Kells Lawyers

1. The appellant pay the respondents' costs of, and incidental to, the appeal on an indemnity basis. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 On 7 September 2020 Markovic J dismissed an application by Kyled Alhalek to set aside a bankruptcy notice issued at the behest of Mario Quintiliani and others trading as "Kells the Lawyers", who had acted for him in proceedings in the Local Court of New South Wales. The bankruptcy notice was founded on a judgment debt arising from a certificate of assessment of costs which was registered as a judgment of the Local Court. 2 Mr Alhalek filed a notice of appeal and the appeal was listed for hearing on 26 May 2021. A matter of days before the hearing Mr Alhalek informed the Court by email that he intended to seek an adjournment as his lawyer had withdrawn "due to [a] last minute clash of commitments". On the eve of the hearing he filed an interlocutory application seeking the adjournment. With some reluctance, after taking oral evidence from him, and over Kells' opposition, the Court granted the adjournment to enable him to secure legal representation. The appeal was later fixed for hearing on 5 August 2021. On that occasion a solicitor appeared for him but his retainer was limited to seeking yet another adjournment. The Court refused the application. The solicitor was then granted leave to withdraw. Mr Alhalek did not appear and the appeal proceeded in his absence. The full chronology is set out in Alhalek v Qunitiliani trading as Kells Lawyers [2021] FCAFC 139 (Alhalek No 1), in which the reasons are given for refusing to adjourn the hearing a second time. 3 The Court made orders dismissing the appeal with costs: Alhalek v Quintiliani trading as Kells Lawyers (No 2) [2021] FCAFC 140 (Alhalek No 2). In response to a request made by Kells' counsel, Mr Parsons, the Court afforded Kells the opportunity to file evidence and make submissions on whether an additional order should be made requiring that costs be paid otherwise than on the ordinary basis or with respect to the costs incurred by Kells acting on their own behalf, having regard to the decision in Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29; 93 ALJR 1007; 372 ALR 555. 4 Kells availed themselves of the opportunity to make submissions on the first question only, seeking an order for indemnity costs of the appeal in general and of the hearing on 26 May 2021 and the preparation for that hearing. 5 Mr Alhalek filed submissions opposing any order for costs. His submissions were unhelpful, amounting to little more than a diatribe against the legal system in general and Kells in particular. As with the submissions he filed in support of the appeal, they were replete with personal invective. Otherwise, they were used as a vehicle to ventilate grievances which had nothing to do with the grounds upon which he had sought to have the bankruptcy notice set aside, let alone the question at hand. He took no heed of the Court's judgment and exhibited no respect for the Court's processes. 6 For the following reasons we are persuaded that an order for indemnity costs should be made. 7 The power to award costs is conferred by s 43 of the Federal Court of Australia Act 1976 (Cth). The Court is given a broad discretion, limited only by the need to act judicially and the obligations imposed by Pt VB of the Act (ss 37M-37P). An express power is included to enable the Court to order that costs awarded against a party are to be assessed on an indemnity basis: s 43(3)(g). 8 Section 37M(3) requires the Court to exercise any power conferred on it by the civil practice and procedure provisions of the Act and the rules made under the Act in the way that best promotes their overarching purpose. That purpose, described in s 37M(1), is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. Section 37M(2) provides that: Without limiting the generality of subsection (1), the overarching purpose includes the following objectives: (a) the just determination of all proceedings before the Court; (b) the efficient use of the judicial and administrative resources available for the purposes of the Court (c) the efficient disposal of the Court's overall caseload; (d) the disposal of all proceedings in a timely manner; (e) the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute. 9 Similarly, s 37N(1) imposes an obligation on the parties to a civil proceeding before the Court to conduct the proceeding in a way that is consistent with the overarching purpose. That obligation applies to all parties, regardless of whether they have legal representation. Further, s 37N(4) provides that, in exercising the discretion to award costs in a civil proceeding, the Court or judge must take into account any failure to comply with that obligation. 10 Ordinarily costs are payable on a party and party basis. That is reflected in r 40.01 of the Federal Court Rules 2011 (Cth). When costs are awarded on this basis, a successful party will rarely, if ever, be able to recover all their costs. Where, however, a case has some "special or unusual feature" which would justify a departure from the ordinary course, the Court may make an order for indemnity costs: see, for example, Cirillo v Consolidated Press Property Ltd (formerly known as Citicorp Australia Ltd) (No 2) [2007] FCA 179 at [3] (Finn J). The purpose of an indemnity costs order is to compensate a party in full for their costs when the Court takes the view that it was unreasonable for the party against whom the order was made to have caused the other party to incur costs: Hamod v New South Wales [2002] FCAFC 97; 188 ALR 659 at [20] (Gray J, Carr and Goldberg JJ agreeing); Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited (No 2) [2017] FCAFC 116 at [3]-[5] (Jagot, Yates and Murphy JJ). 11 In Alhalek No 2, we observed that Mr Alhalek's written submissions did not directly address any of the grounds of appeal and we found no merit in any of his complaints or arguments. He made baseless allegations of bias against Markovic J and his attacks on Mr Quintiliani were splenetic. At the same time he appeared to acknowledge the futility of the appeal, conceding that Kells' conduct had been "legal" and describing his own submissions as "precarious … from a legal standpoint". The use of the Court's processes in this way was not merely inconsistent with the overarching purpose of the Act and Rules; it was antithetical to that purpose. 12 In these circumstances, it is unnecessary to make any separate order concerning the costs of, and the preparation for, the May hearing. The appeal was doomed to fail from the outset. Mr Alhalek's attempts to postpone the inevitable by his multiple adjournment applications may well have been designed to buy him time to comply with the bankruptcy notice. We note that four days after the appeal was dismissed Mr Alhalek notified the Court that he had paid the judgment debt the subject of the notice, attaching to his email a lodgement receipt from the ANZ Bank showing that the amount had been transferred to Kells' account. But the delay also served to unnecessarily increase Kells' costs. There is no good reason why they should have to shoulder the burden of any part of them. 13 It follows that there will be an order that the appellant should pay the respondents' costs on an indemnity basis. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Katzmann, Derrington and Anastassiou.