Canberra Residential Developments Pty Limited v Brendas

Federal Court of Australia|2010-02-16|Before: Graham J, Stone J

REASONS FOR JUDGMENT 1 On 30 January 2009 Graham J made orders dismissing an application made by Canberra Residential Developments Pty Limited (CRD) and ordering that it pay the costs of the respondents in that proceeding; [2009] FCA 34, 69 ACSR 435. CRD filed a notice of appeal on 20 February 2009. It is likely that the appeal will be heard over a number of days in the week commencing 11 May 2010. In the interim the first, second and third respondents have moved to recover their costs in accordance with the order made by Graham J. The fourth respondent has not yet filed a bill of costs and, in these reasons, unless otherwise indicated, a reference to the respondents should be read as referring to the first, second and third respondents and not to the fourth respondent. 2 On 7 August 2009 the respondents filed a bill of costs in the amount of $673,334.94. On 4 September 2009 the taxing officer made an estimate of the approximate total for which a certificate of taxation would be likely to issue if the bill were to be taxed; Federal Court Rules O 62 r 46(3)(a). The estimated amount was $531,716.30. 3 On 24 September 2009, the applicants filed a notice of objection to the estimate. On 8 February 2010, the taxing officer made a decision, expressed in the form of an order of the Court, that an interim certificate of taxation issue in the amount of $381,826.16 and an interim certificate for this amount was issued on the same date. That amount has its origin in the objection made by CRD to the bill of costs filed by the respondents. The applicant made detailed objections to some items in the bill of costs and made no objection to other items. The total of the items to which no objection was made was $381,826.16. 4 By amended notice of motion filed in Court today CRD seeks the following orders: 1. That the Interim Certificate of Taxation issued by the Court on 8 February 2010 be set aside. 2. That the order made by Graham J on 30 January 2009 that the applicant pay the respondents' costs be stayed pending the final orders of the Full Court in proceedings ACD 12 of 2009. 3. That the taxation of the respondents' costs of the hearing before Graham J be stayed pending the final orders of the Full Court in proceedings ACD 12 of 2009. 4. That each respondent be restrained from taking any step to draw on the following bank guarantees provided in support of the applicant's provision of security for the respondents' cost of the proceedings before Graham J: i) ANZ Banking Group Limited Bank Guarantee No. 2007/0270 in the amount of $75,000 ii) ANZ Banking Group Limited Bank Guarantee No. 2007/1469 in the amount of $50,000 iii) ANZ Banking Group Limited Bank Guarantee No. 2007/0269 in the amount of $75,000 5. That the respondents do all things necessary for the sum of $40,000 paid to Gillespie Jones & Co from Bradley Allen be forthwith paid into the Federal Court of Australia and such sum not to be released pending further order of this Court. 6. The costs of this application be paid by the respondents. 5 The amended notice of motion should be further amended so that each reference to the respondents be limited so as to refer to the first, second and third respondents only and not to the fourth respondent.

Order 1 in the notice of motion - the interim certificate of taxation 6 The applicant contends that the interim certificate of taxation should be set aside because contrary to O62, r 42(1), the taxing officer did not allow 14 days between the date of her decision and the date of issue of the interim certificate. The effect was that the opportunity for objection to the decision provided in subrules 42(1A)-(6) was not available to the applicant. 7 The respondents drew my attention to the provision made under O 62 r 46(3)(c) for parties to object to an estimate and to the fact that the applicant filed a detailed notice of objection to the taxing officer's estimate on 19 January 2010. Rule 46 provides that where an objection is made, the Registrar is to send written notification to each party interested in the bill of the estimate made. It provides that a notice of objection to the estimate may be filed and served within 21 days of that notification, and, if there is no notice of objection, for the amount of the estimate to be deemed to be the amount for which a certificate of taxation may issue. Where there is an objection, r 46(3)(e) provides that the Registrar may direct that "sub-rule (4) apply or that the taxation of the bill proceed". 8 It is not clear whether the Registrar made any formal direction, however it appears that it was decided that the taxation should proceed and on 8 February 2010, the first day of the costs hearing, the decision in relation to the interim certificate was made. At this point the objection procedure under O 62 r 46 was exhausted and O 62 r 42(1) applied, with the requirement that 14 days be allowed between the decision to tax at a specific amount and the issue of the certificate. That was not done here. 9 The respondents submit that the Court, in exercise of its general discretion under O 1 r 8, should waive compliance with the 14 day period. The basis of this submission is that the total stated in the interim certificate is the total of items in the respondents' bill of costs to which the CRD did not object. Therefore, it was submitted, they should be taken to have accepted this amount as an interim total. 10 Order 1 r 8 gives the Court an extremely wide discretion to waive compliance with the rules, however I am not satisfied that this is an appropriate case to exercise that discretion. Exercise of the discretion is appropriate where strict application of the rules would cause some injustice, as for instance, in circumstances not anticipated by the rules. In general, it is not appropriate to exercise the discretion where the rules, as in relation to the taxation of costs, have set up specific and detailed procedures designed to protect the position of both parties. In particular I am not disposed to deprive CRD of the opportunity afforded by the rules to object to a taxation decision. I therefore will order that the interim certificate of taxation issued on 8 February 2010 be set aside. I also accept CRD's submission that it should be allowed the full period for objection contemplated by the rules. I will therefore order that the taxing officer allow 14 days from the date of the Court order before issuing any further certificate.

Order 2 in the notice of motion - stay of costs order 11 CRD does not press its application for order 2 in the notice of motion. That order would stay Graham J's order that the applicant pay the respondents' costs. In any event, I would not be disposed to make that order given that it is more than a year since his Honour's order was made and CRD only now seeks a stay.

Order 3 in the notice of motion 12 Order 3 in the notice of motion, namely, that the taxation of the respondents' costs be stayed pending the resolution of the appeal, would effectively give CRD the same advantage as that sought in order 2. 13 The submissions put in favour of the taxation being stayed pending the resolution of the appeal focussed on the alleged disadvantages of the parties having to deal with taxation while in the course of preparing for an "imminent" appeal. As mentioned above, the appeal is likely to be heard in about three months time. In that circumstance I am not sure that the adjective "imminent" is really appropriate. 14 I am conscious that the applicant has suffered some disruption to its preparation for the appeal by the necessity to respond to the respondents' attempt to restrain CRD's former solicitors from acting on the basis of an alleged conflict. Although CRD ultimately succeeded in resisting that application, they did engage new solicitors and have suffered consequent disruption to their preparation. Nevertheless, I am not satisfied that continuing with the taxation will be a significant additional disruption. CRD has already submitted detailed objections to the respondents' bill of costs and it would seem that, as the counsel for the respondents put it, "the heavy lifting has been done". I also note that no issue has been raised as to the inability of the respondents to pay costs if the costs of the first instance proceedings be reversed even if they are also ordered to bear the costs of the appeal. 15 The hearing of the appeal will not be before May and, given the complexity of the matter, it is reasonable to assume that the judgment of the Full Court may be reserved for some time. In the circumstances outlined above and where costs orders were made in January 2009 and the resolution of the appeal is not imminent, it seems to me that the respondents should not be kept out of the benefit of the costs order made in their favour until the appeal is finally resolved.

Order 4 - the bank guarantees 16 CRD also seeks to restrain the respondents from taking any step to draw on bank guarantees listed in the notice of motion. I note that the respondent does not press for the order to extend to the last bank guarantee mentioned in order 4, that is Bank Guarantee No 2007/0269, which was given to secure the costs of the fourth respondent 17 The considerations discussed in relation to the proposed order 3, apply equally to the bank guarantees and for the same reasons I decline to make the proposed order 4.

Order 5 in the notice of motion - payment into Court of $40,000

18 In late 2007, Graham J ordered that the applicant provide additional security for the first to third respondents in the sum of $40,000. His Honour further ordered that the amount: be held on trust by Bradley Allen and not released or distributed without further order of the Court, or written consent of the respondents, in whose favour the security is provided. 19 That amount was provided and deposited in accordance with his Honour's orders in the trust account of the CRD's then solicitors, Bradley Allen. It is not in contention that CRD consented to an order for security for costs in those terms. Nevertheless the form of the order quoted above is striking in that it would appear to allow the respondents to have access to the $40,000 security at any time. On a literal construction, they could have obtained access to that amount even before the determination of the proceedings before his Honour. In such case there would seem to be no point in the money being held on trust; it might just as well have been paid to the respondents directly. 20 Despite the above wording, when his Honour's orders are read together it is clear that their purpose was to provide security for costs. It follows that, read in context, the respondents are entitled to access the amount held in trust as security for their costs only in circumstances when the applicant is obliged to pay their costs. Those circumstances have arisen. The respondents have a costs order in their favour and, in fairness, I should point out that the respondents did not attempt to exercise their rights until such an order had been made. When they did so Bradley Allen released the funds and transferred them to the respondents' current solicitor. Apparently, the funds had not cleared by 15 February 2010 and have not, to this point, been paid to the respondents. The question is whether the Court should interfere at this time to prevent the payment of that sum and order that, the amount be paid into the Federal Court. 21 The release of the money to the respondents' solicitors, irrespective of any error that may have been made in the order, is consistent with the spirit of the orders. In those circumstances, I am not disposed to interfere with the orders made by his Honour, or to restrain the respondents' current solicitor from paying that amount to the respondents. I also accept the respondents' submission that, where it is not contended that they would be unable to repay that amount should the costs order be reversed, the Court should not interfere. 22 The applicant also sought that the costs of this application be paid by the respondents. Neither party has addressed any submissions on that point. In general costs should follow the event. The applicant has been largely unsuccessful, but it has succeeded on one important point, which is in respect of the interim certificate of taxation. In the circumstances, before making a decision in relation to costs, I will give the parties five days within which to file written submissions as to costs. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone.

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