Bechara v Bates

1. The applicant is to pay the respondent's costs fixed in the sum of $6000.00. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

PERRY J: 1 By a decision given on 6 April 2018, I refused the grant of an extension of time within which Ms Bechara, the applicant, could seek leave to appeal a decision of the Federal Circuit Court (FCC) given on 3 March 2017: Bechara v Bates [2018] FCA 460 (Bechara (No. 1)). The FCC in turn had dismissed an application for reinstatement of the proceeding under r 16.05(5)(2)(a) of the Federal Circuit Court Rules 2001 (Cth), after dismissal of the proceedings for non-appearance and lack of due diligence in prosecution on 8 December 2016. 2 I reserved the question of costs in order to allow the applicant the opportunity to be heard on Mr Bates' application for a lump-sum costs order under Rule 40.02(b) of the Federal Court Rules 2011 (Cth) (FCR) in the sum of $7238.00 (inclusive of GST) because this application was supported by evidence provided only at the hearing of the application for an extension of time on 15 March 2018: Bechara (No. 1) at [37]. At delivery of judgment I heard short oral submissions and ruled that this was an appropriate case for the award of costs on a lump-sum basis. As the applicant was not adequately prepared to argue quantum of the lump sum on 6 April 2018 when judgment on the extension of time application was delivered, I made timetabling orders for the provision of short submissions as to the quantum of costs. 3 The discretion to award costs in a specified sum instead of by way of a taxation is conferred by s 43(3)(d) of the Federal Court of Australia Act 1976 (Cth). As Tamberlin J said in Nine Films and Television Pty Ltd v Ninox Television Ltd [2006] FCA 1046: 3. This judicial discretion 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. 4 A number of circumstances weighed heavily in favour of the award of a lump sum in this case including that: the proceedings instituted by the applicant had no reasonable prospects of success; the matter involves a bankruptcy and therefore ought to be dealt with expeditiously; a taxation may further delay matters and result in the incurring of unnecessary costs; and the respondent seeks costs on a party/party basis in respect of only a small number of items in a broadly reasonable amount. 5 In Hislop v Paltar Petroleum Ltd (No 4) [2017] FCA 1632, Gleeson J helpfully summarised the general approach to undertaking an assessment of costs on a lump sum basis: 7 Specification of a lump sum is not the result of a process of taxation or assessment of costs; the sum can only be fixed broadly having regard to the information before the Court; the approach taken to estimate costs must be logical, fair and reasonable: Harrison v Schipp [2002] NSWCA 213; (2002) 54 NSWLR 738 at [22]. The task is one of estimation or assessment and not of arithmetic: Bayley & Associates Pty Ltd v DBR Australia Pty Ltd [2014] FCA 346 at [17(e)]. The sum of costs fixed should be proportionate to the nature, including the complexity, of the case: Bitek at [18]. 8 The starting point for the fixing of costs is the charges rendered by Mr Hislop's solicitors. Then, there may be an "impressionistic discount of the costs actually incurred or estimated, in order to take into account the contingencies that would be relevant in any formal costs assessment": Bitek at [18], citing Hamod v New South Wales [2011] NSWCA 375 at [820]. However, the court must be "astute not to cause an injustice": Bitek at [23]. 6 Further, the Court "is not precluded from undertaking a close inquiry of costs relating to a particular issue or category of costs, should the Court consider it appropriate to do so: see e.g. Hudson v Sigalla (No 2) [2017] FCA 339 at [30]": Paciocco v ANZ Banking Group Ltd (No 2) [2017] FCAFC 146 at [18] (Allsop CJ, Besanko and Middleton JJ). 7 Mr Bates seeks an award of costs for a lump-sum figure of $7238.00 (including GST) in reliance on a tax invoice rendered to him by his solicitors and dated 14 March 2018. The invoice reveals that the lump sum sought is comprised of professional fees calculated for: (1) preparation for the hearing of the application, correspondence, and attendance at the directions hearings on 11 October 2017 and 13 December 2017, which costs have already been invoiced in the sum of $3980.00 (plus GST); and (2) anticipated professional fees in the sum of $2600.00 (plus GST) for attendance at the hearing of the application on 15 March 2018, including travel to and from Court, and meeting with Mr Bates in relation to the same. 8 Most of the work was undertaken by senior solicitors for an hourly rate of $500.00 per hour (plus GST). That rate, as Mr Bates points out, is less than the maximum hourly rate specified for attendance by a lawyer in paragraph 1.1 of Sch 3 to the FCR (Federal Court Scale of Costs), which is $580.00 per hour (plus GST in accordance with Federal Court Costs Practice Note (GPN-Costs)). I accept that the rate charged of $500.00 (plus GST) is reasonable having regard to the nature of the matter. Only one service was provided by a paralegal/law clerk whose charge out rate was $300.00 per hour (plus GST), which I also accept was reasonable. The applicant's objections are largely that excessive time was spent on certain matters such as correspondence and/or that many of the services could have been carried out by paralegals or law clerks. However I accept Mr Bates' submission that many of the services carried out by his solicitors are routinely and properly carried out, and charged for, by fully qualified solicitors. I also accept his submission that it is likely that it would have taken more time for the senior solicitor instead to have found a paralegal to carry out a relatively short task which the senior solicitor would have then been required to check. 9 I also accept that the attendance by a senior solicitor at the hearing of the application on 15 March 2018 was fair and reasonable. I do not accept the submission by the applicant that an hourly rate of only $220 should be permitted on the basis that legal skills were not required because the respondent appeared with leave of the court as a self -represented barrister. 10 I also agree that, while the issues were ultimately relatively straightforward, affidavits with very lengthy annexures were filed by the applicant and her then solicitor. Furthermore, neither the application for an extension of time which listed some 32 grounds, nor the applicant's submissions, were clearly expressed or well structured, adding unnecessary complexity to the matter. 11 In the circumstances, I consider that a lump-sum figure should be awarded which is discounted by approximately 10% of the amount claimed on the tax invoice so as to take into account the contingencies that would be relevant in a costs assessment. In limiting the discount to approximately 10%, I accept as submitted by Mr Bates that the overall costs claimed is relatively modest for a fully contested application for leave to appeal to the Federal Court from the Federal Circuit Court. 12 Finally, while Mr Bates claimed a lump sum award inclusive of GST, upon further inquiry after judgment was reserved he advised the Court that he would be entitled to claim an input tax credit for GST levied on the solicitors' professional fees. In those circumstances and in accordance with paragraph 6.5 of GPN-Costs, the lump sum award of costs should exclude GST so as to avoid a windfall. 13 For these reasons, I consider that the respondent should be awarded his costs in the sum of $6000. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perry.