Crescent Capital Partners Management Pty Limited v Crescent Funds Management

1. Unless otherwise agreed, the quantum of the costs pursuant to Order 1 of the Order of 19 September 2022 be awarded in a lump-sum pursuant to rule 40.02(b) of the Federal Court Rules 2011 (Cth) to be determined by a Registrar of the Court, who shall upon determination, make an order fixing the amount of those costs, which are to be payable within 28 days of such order. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

GOODMAN J 1 These reasons for judgment concern the costs of this proceeding. 2 The parties are agreed that the applicant should pay the respondent's costs on a party and party basis (and an order has been made to that effect) but are at issue as to whether an order should be made pursuant to r 40.02(b) of the Federal Court Rules 2011 (Cth) for the costs to be awarded on a lump-sum basis. The respondent seeks such an order and the applicant resists it. 3 The Court's discretion as to costs, found relevantly in s 43 of the Federal Court of Australia Act 1976 (Cth), as supported by r 40.02(b), is broad, but its exercise is informed by s 37M of the Act which requires that it be exercised in a manner which best promotes the overarching purpose of facilitating the just resolution of disputes according to law and as quick, inexpensively and efficiently as possible. The exercise of the discretion is also informed by the Court's Costs Practice Note. 4 The Practice Note includes: (1) at 3.1: The Court recognises that the procedure for determining the quantum of costs for a party successful at a final hearing should not be delayed and should be as inexpensive and efficient as possible. (2) at 3.3: … the Court's preference is to avoid, where possible, the making of costs orders that lead to potentially expensive and lengthy taxation of costs hearings. Rather, the Court will seek to adopt, and will encourage parties to utilise, the appropriate use of sophisticated costs orders and procedures, including lump-sum costs orders…; (3) at 4.1: The Court's preference, wherever it is practicable and appropriate to do so, is for the making of a lump-sum costs order. 5 In Paciocco v Australia and New Zealand Banking Group Ltd (No 2) [2017] FCAFC 146; (2017) 253 FCR 403 at 406-407 [13] to [20], the Full Court (Allsop CJ, Besanko and Middleton JJ) summarised the relevant legal principles as follows: 13 The Court has a general discretion to award costs under s 43 of the Federal Court of Australia Act 1976 (Cth) (the "Federal Court Act"). Under s 43(3), the Court may, among other things: (a) make an award of costs at any stage in a proceeding, whether before, during or after any hearing or trial; … (d) award a party costs in a specified sum; … 14 Section 43 of the Federal Court Act is supported by r 40.02(b) of the Federal Court Rules 2011 (Cth) (the "Rules"), which provides: A party or a person who is entitled to costs may apply to the court for an order that costs: … (b) be awarded in a lump sum, instead of, or in addition to, any taxed costs; … 15 The purpose of such a rule is "to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation": see Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 120. 16 On 25 October 2016 the Chief Justice issued the Central Practice Note: National Court Framework and Case Management (CPN-1) ("Central Practice Note") and the Costs Practice Note (GPN COSTS) ("Costs Practice Note"). The Central Practice Note states that the determination of the quantum of costs of a successful party (in a proceeding) should not be delayed and, to this end, the Court will, where appropriate, facilitate the making of lump sum costs orders. The Costs Practice Note provides that the Court's preference, wherever it is practicable and appropriate to do so, is to make a lump sum costs order so as to finalise costs and avoid potentially expensive and lengthy taxation hearings. It makes clear that the Court should now proceed on the basis that taxation "should be the exception" and confined to matters which are unable to be determined otherwise: Costs Practice Note at [3.3]. The guiding principles are to reduce delay and cost when quantifying costs: Costs Practice Note at [3.1]. 17 The Costs Practice Note provides for the Court to make use of sophisticated costs orders and procedures, and to take such steps as it considers necessary to ensure that it has the requisite level of detail to make a costs determination that is fair, logical and reasonable and to avoid orders that lead to potentially expensive and lengthy taxation hearings: Costs Practice Note at [3.3]. 18 We emphasise that in making a lump sum award of costs, the Court in undertaking the task of assessing costs 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 eg Hudson v Sigalla (No 2) [2017] FCA 339 at [30] (Sigalla). The Court is able to adopt its own procedures in inquiring into costs, is able to be flexible in how it conducts that inquiry, including by the obtaining of suitable assistance whether by referee's report or other reporting, and is able to acquire the level of detail needed to make a determination that is fair, logical and reasonable. 19 Whilst the Costs Practice Note now suggests that most cases should have a lump sum costs order approach applied unless there is some characteristic that would make it unsuitable, a lump sum costs order is not mandated in all instances. In all cases it is a matter for the Court to exercise the discretion given to the Court by the Federal Court Act and the Rules as appropriate: see Sigalla at [18]-[19]. 20 There is no particular characteristic that a case must possess for it to be suitable for the making of a lump sum costs order. Particular circumstances that may make a lump sum order especially appropriate include where in a large and complex commercial matter it would save the time, trouble, expense and aggravation of a taxation; where a taxation would require the parties to consume additional time and incur additional expenditure prolonging already protracted litigation; and generally to avoid an ongoing, counter-productive dispute as to costs, in the interests of achieving finality. 6 In my view, a lump-sum costs order should be made. Such an order would be consistent with the Court's expressed preference that such orders be made. Further, as the Full Court explained in Paciocco at 406 [16], the Court should proceed on the basis that taxation should be the exception to the general position that a lump-sum order is to be made. I am not satisfied that this is an exceptional case. 7 The applicant submitted that the taxation process should be preferred because it provides advantages of the kind described by Buchanan J in Curtis-Smith v Secretary, Department of Social Services (No 2) [2016] FCA 975 at [10], including more detailed bills of costs, more focussed objections and if necessary, more detailed scrutiny. The applicant also submitted that in the absence of a bill of costs in taxable form, with charges for individual items set out in the bill in a transparent manner by reference to the scale, neither the Court nor the applicant can have much confidence that the amounts claimed using the process set out in the Practice Note are amounts to which the respondent is entitled. 8 I do not accept those submissions. The evident purpose of the lump-sum procedure is to provide a quicker, less expensive and more efficient process by which costs are determined, consistent with the overarching purpose. As Markovic J stated in Crescent Capital Partners Management Pty Limited v Crescent Funds Management (Aust) Limited [2019] FCA 1082; (2019) 139 ACSR 224 at 232 [42]: "… The express intention of the lump-sum costs procedure is to streamline and expedite the determination of the question of the quantum of costs and not replicate the taxation procedure." Further, as the Full Court in Paciocco emphasised at 407 [18], the Court in making a lump-sum award of costs is not precluded from undertaking a close inquiry of costs relating to a particular issue or category of costs should the Court consider it necessary to do so. It will be open to the applicant to agitate specific issues should it wish to do so. 9 The applicant submitted that the taxation process may not necessarily be long, drawn out or costly. That might be so, but the process for determining the costs on a lump-sum basis will most likely be quicker. 10 The applicant also submitted that a lump-sum costs order was not appropriate because the present case did not share features that have been present in cases where a lump-sum costs order have been made. In particular, the applicant submitted that the present case is not: (1) either a large, complex and protracted case, or a particularly simple case; (2) one in which the applicant has been or will be obstructive; and (3) one in which the applicant would not be in a position to pay the costs of the taxation process if so ordered. 11 I have considered each of these matters but do not consider them to be of particular moment in the exercise of the discretion in the present case. The discretion to make a lump-sum costs order does not depend upon the complexity of the proceeding: Fewin Pty Ltd v Burke (No 3) [2017] FCA 693 at [49] (Markovic J). If findings were available that the applicant is likely to frustrate the taxation process or to be unable to pay the costs of that process, such findings may have provided an additional reason to make a lump-sum costs order, however there is no basis for either finding and neither finding is necessary to make the order sought. There is already a sufficient basis for such an order. 12 The order sought by the respondent is in terms providing for the determination of the quantum of the costs to be undertaken by a Registrar of the Court. There is undoubtedly power to make an order in these terms: Paciocco at 411 [39]. I consider it is appropriate to do so, consistent with the overarching purpose. 13 For the reasons set out above, the order sought by the respondent should be made. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Goodman.