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[2016] FCA 257
Federal Court of Australia
2016-03-21
Katzmann J
Original judgment source is linked above.
The application for an extension of time 41 The next question is whether Ms Keys should now be granted an extension of time to file a notice of objection. This is the critical question because a taxing officer is entitled, if not bound, to issue a certificate of taxation unless a notice of objection has been filed and without an extension of time the notice cannot be filed. 42 Rule 1.39 gives the Court power to extend a time fixed by the Rules before or after the time expires and irrespective of whether an application for extension is made before the time expires. There is no reason to suppose that r 1.39 would not apply to an application to extend the time to file a notice of objection to an estimate of costs and I accept that it does: see Calder v Commissioner of Taxation [2006] FCA 1299. 43 While the discretion to extend time is at large, there are a number of relevant considerations which guide its exercise. They include the extent of the delay, whether the applicant has provided an acceptable explanation for the delay, whether the respondent is prejudiced by the delay, and the merits of the substantive application: see, for example, Hunter Valley Developments Pty Limited v Cohen (1984) 3 FCR 344 at 348 (Wilcox J). 44 By her own admission, apart from taking the misguided step of consulting with Mr Dahler, Ms Keys took no action with respect to the costs estimate until three weeks after she claimed to have received it, one week of which fell within the prescribed time in which the notice was to be filed. No explanation was offered for her inaction in the week after she said she received the notice. The form (form 128) required little effort to complete. It already includes a statement of objection and merely calls for the insertion of the formal parts and a signature. It is true that Ms Keys was also required to lodge security of $2,000, but she did not suggest that she had any difficulty raising the security. 45 It seems from the correspondence annexed to Ms Keys' affidavit that she first determined to seek an extension of time on or about 29 June 2015, advising the Registry (apparently copying in the ACT Government Solicitor) that she would do so on the ground that Mr Dahler, as an interested person, had not been served with the bill of costs. 46 On 20 July 2015, about a month after Ms Keys was informed by the Deputy District Registrar that she would need to file an interlocutory application, she presented an interlocutory application to the Registry in Mr Dahler's name. A week later she applied for the fee to be waived. The interlocutory application was rejected for filing on 3 September 2015 because the order was made against her, not Mr Dahler. As I indicated earlier in these reasons, however, she filed another application in Mr Dahler's name a few days later, which was accepted for filing, presumably because the requisite fee was paid. 47 Taking a benign view of the chronology, then, the first attempt to seek an extension of time in which to file a notice of objection was made on 20 July 2015 - more than three weeks after the period had expired. There is no explanation for this delay. 48 On the other hand, the delay is not inordinate and the Minister does not submit that he is prejudiced by it. But "an extension of time should not be granted if the substantive application is not reasonably arguable": Hamden v Secretary, Department of Human Services [2013] FCA 3 at [40] (Besanko J). That point is not addressed in Ms Keys' submissions. Indeed, she does not expressly address the application for extension of time at all. 49 So what is the basis for the objection to the estimate? 50 If, as it appears from the amended interlocutory application, the basis for the objection is the basis Ms Keys identified in the correspondence annexed to her affidavit - that Mr Dahler should have been served with the estimate because he is a "person interested in the bill" - then the objection is hopeless. Since Mr Dahler was not ordered to pay any costs, he has no relevant interest in the bill. As I noted above, a "person interested in the bill" means "a party or a person in whose favour or against whom an order for costs has been made". No costs order was made for or against Mr Dahler. 51 No other basis for challenging the estimate is disclosed in the evidence. Nowhere in Ms Keys' affidavit is there any suggestion that the estimate was not reasonable. The itemised bill of costs prepared by the ACT Government Solicitor, annexed to Ms Keys affidavit, totals $24,267.97, roughly half of which were costs and half disbursements. At $18,881.83 the estimate is not manifestly excessive. Save for a misguided legal argument mounted in support of her stay application that the ACT Government Solicitor is not entitled to recover costs (to which I will come shortly), Ms Keys does not suggest that the costs were not properly incurred. 52 Taking into account all the relevant considerations - the want of prejudice to the respondent, the length of the delay, the deficiencies in the explanation for it, and the failure to advance any reasonably arguable basis for challenging the estimate - I am not persuaded that it would be fair and equitable to extend the time to file a notice of objection. 53 It follows that, subject to the resolution of the stay application, the certificate of taxation should not be set aside.
The stay application 54 The argument on the stay application was to the effect that, by operation of s 55H of the Judiciary Act, the ACT Government Solicitor was not entitled to costs because the costs of the proceeding were not legally recoverable as "costs incurred by the client". Consequently, she submitted, the filing of a bill of costs and the "acquisition of a Certificate of Taxation" was an abuse by the ACT Government Solicitor of the costs assessment process, "warranting a permanent stay of that process". 55 Rule 41.03, upon which Ms Keys relies in support of this application, permits a party bound by a judgment or order to apply to the Court for an order that the judgment or order be stayed; it does not provide for a stay of proceedings. A certificate of taxation is not a judgment or order. No doubt the Court has an implied power to stay a proceeding if it is an abuse of process, but the certificate of taxation is not a proceeding either. 56 In any case, the argument is based on a misconception. Section 55H does not preclude the ACT Government Solicitor from recovering its costs from Ms Keys, as the person adjudged liable to pay costs. 57 Section 55H provides: (1) If: (a) services of a legal professional nature are provided to a person or body (the client) by an officer of, or a person employed in, a Government Department of a State, of the Australian Capital Territory or of the Northern Territory in his or her capacity as such an officer or employee in the course of acting for the client in proceedings in a federal court or in a tribunal established by a law of the Commonwealth; and (b) the Department charges the client for any of the services or for disbursements incurred in connection with any of the services; the amount charged may be recovered by the client as costs incurred by the client in the proceedings. (2) If an amount charged as mentioned in paragraph 1(b) is not an amount of disbursement then, for the following purposes: (a) an application to a federal court … for the award of costs; (b) the taxation of those costs; (c) the recovery of the costs by the client; the amount charged is taken to have been paid by the client. 58 The ACT admitted that it was not charged by the ACT Government Solicitor for any services or disbursements in connection with the proceedings. It also admitted that it was under no obligation to pay the ACT Government Solicitor. 59 In general, the purpose of an order for costs is to provide an indemnity or a partial indemnity for professional legal costs actually incurred in legal proceedings: Cachia v Haines (1994) 179 CLR 403 at 410; Harold v Smith (1860) 5 H & N 381 at 385; 157 ER 1229 at 1231 (Bramwell B). This is commonly referred to as "the indemnity rule". As Redlich and Mandie JJA observed in Shaw v Yarranova Pty Ltd [2011] VSCA 55 at [8]: Such an order does not entitle the successful litigant to recover more than he or she has paid or is liable to pay to his or her own lawyer. The rule limits the successful party's right to indemnification to the "necessary or proper" costs incurred to obtain justice in the case. The costs are usually confined to those that the successful party "was primarily and potentially legally obliged to pay to his solicitor". Hence the existence and scope of the successful litigant's duty to pay his or her own solicitors is central to the ability to recover costs. (Footnotes omitted.) 60 But there are exceptions to the rule and this case falls within the recognised exceptions. 61 It is a long standing principle that a successful party who is represented by a Crown solicitor is not disentitled to costs from an unsuccessful party merely because the successful party is under no personal liability to the Crown solicitor for costs: see, for example, Inglis v Moore (No 2) (1979) 46 FLR 470 at 472 (St John and Brennan JJ); Commonwealth Bank of Australia v Hattersley (2001) 15 NSWLR 333 at 338-9. In Lord Advocate v Stewart (1899) 36 Sc LR 945 at 945 Lord Stormonth Darling said: So long as the fees proposed to be charged are reasonable in amount … there is no reason why [the unsuccessful party] should escape part of the consequences of his unrighteous litigation merely because of this arrangement between the Crown and its officers. In one sense, no doubt, he does not cause any additional expense to the Crown; because the salaries would have to be paid whether he litigated or not. But it is to be presumed that the salaries have been calculated on the footing of there being an average amount of litigation, and each salary, therefore, may be said to contain the equivalent of each separate fee. If so, there is no injustice in the Crown being recouped to that extent by the losing party. 62 In Far West Coast Native Title Claim v State of South Australia (No 8) [2014] FCA 635 at [21] Mansfield J noted that: The established jurisprudence is that a party who is represented by the Crown Solicitor or Australian Government Solicitor notionally incurs cost to his solicitor although he will not have to pay any money to the solicitor: see Ditton v Gallagher (1992) 110 ACTR 12 at 15 per Gallop J. 63 The ACT was established as a body politic under the Crown by s 7 of the Australian Capital Territory (Self-Government) Act 1988 (Cth). The ACT Government Solicitor was established by s 6 of the Law Officers Act 2011 (ACT) as a body corporate entitled to act as legal practitioner for (amongst others) the Crown in right of the Territory. In this respect, the ACT Government Solicitor is no different from a Crown solicitor. 64 This position is not affected by s 55H of the Judiciary Act. 65 The evident purpose of s 55H is to facilitate the recovery of certain costs by a client of State and Territory government legal practices. It is an enabling provision, though why it was thought necessary is unclear. On its face, it does not operate as a bar to the recovery of costs from an unsuccessful party. Given the long-standing principle recognised by the case law, if that were the intention of the Parliament, one would expect to find something in the statute or the extrinsic material to indicate that its purpose was to remove the existing right. The statute is silent. To the extent that any assistance can be gleaned from extrinsic material, the second reading speech to the amending bill which inserted s 55H (the Law and Justice Legislation Amendment Bill 1997), it does not support the construction Ms Keys sought to place on it. 66 At one point in her submissions Ms Keys appears to concede that s 55H may not apply to a "usual order for costs". She argues, however, that the costs order in the present case was not made on the usual basis because it was made, not against the unsuccessful party, but against the unsuccessful party's lawyer. Yet s 55H is not concerned with who is required to pay the costs but who can recover them. 67 It follows that I also reject the proposition that the actions of the ACT Government Solicitor in filing a bill of costs and procuring a certificate of taxation constitute an abuse of process and I refuse the application for a permanent stay.
Conclusion 68 The amended interlocutory application should be dismissed with costs. I certify that the preceding sixty-eight (68) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Katzmann.
Dahler
Australian Capital Territory
REASONS FOR JUDGMENT 1 On 2 September 2014 I made orders dismissing an application by Clinton Dahler for leave to appeal against a judgment and orders of the Federal Circuit Court: Dahler v Australian Capital Territory [2014] FCA 946. After receiving further submissions on costs, I ordered that Mr Dahler's barrister, Judith Keys, who appeared on a direct access basis, personally pay the respondents' costs: Dahler v Australian Capital Territory (No 2) [2014] FCA 1154 (the costs judgment). Both respondents were represented by the ACT Government Solicitor, who sought to recover costs on behalf of the ACT only. 2 After Ms Keys declined to pay the amount the ACT Government Solicitor sought from her, she was served with a bill of costs. In accordance with the terms of the Federal Court Rules 2011 (Cth), a Deputy District Registrar, in her capacity as a taxing officer, proceeded to make an estimate of the costs and notified Ms Keys of that estimate. Ms Keys purported to file a notice of objection to the estimate, but the notice was received by the Registry outside the time prescribed by the Rules and returned to her "unfiled", together with a cheque she had submitted as security for the costs of having the bill taxed. The Deputy District Registrar then issued a certificate of taxation, certifying the costs in the amount of the estimate. 3 More than two and a half months later, on 8 September 2015, Ms Keys filed an interlocutory application, purportedly on Mr Dahler's behalf, seeking orders setting aside the certificate of taxation and extending the time to file a notice of objection to the estimate. No affidavit was filed with the interlocutory application, although the Rules require that, if appropriate, an interlocutory application be accompanied by an affidavit: r 17.01(1). There could have been no doubt that this was a case in which it was appropriate that an affidavit be filed with the interlocutory application and, on 3 November 2015, shortly before the matter was listed before me for directions, Ms Keys filed a supporting affidavit. 4 At the directions hearing, which took place on 6 November 2015, I ordered that Ms Keys be added as an applicant pursuant to r 9.05 and I listed the matter for mediation. Regrettably, the parties were unable to settle their differences and it falls to me to resolve their dispute. By consent, the application was heard on the papers.
The powers of review 18 The original interlocutory application was silent as to the basis upon which Ms Keys claimed that she was entitled to an order setting aside the certificate of taxation. In the amended interlocutory application, however, she relied upon s 35A(6) of the Federal Court of Australia Act 1976 (Cth), which gives the Court the power, either on application by a party to proceedings in which the Registrar has exercised any of the powers under subs (1) or of its own motion, to review an exercise of power by a Registrar under the subsection and to make such order or orders as it thinks fit with respect to the matter. A review of a Registrar's decision under s 35A(6) involves a hearing de novo: Deputy Commissioner of Taxation v Starpicket Pty Ltd (No 2) [2013] FCA 699 at [6] (Gordon J). 19 Section 35A relevantly provides: (1) Subject to subsection (2), the following powers of the Court may, if the Court or a Judge so directs, be exercised by a Registrar: (a) the power to dispense with the service of any process of the Court; (b) the power to make orders in relation to substituted service; (c) the power to make orders in relation to discovery, inspection and production of documents in the possession, power or custody of a party to proceedings in the Court or of any other person; (d) the power to make orders in relation to interrogatories; (e) the power, in proceedings in the Court, to make an order adjourning the hearing of the proceedings; (f) the power to make an order as to costs; (g) the power to make an order exempting a party to proceedings in the Court from compliance with a provision of the Rules of Court; (h) a power of the Court prescribed by Rules of Court. (2) A Registrar shall not exercise the powers referred to in paragraph (1)(f) except in relation to costs of or in connection with an application heard by a Registrar. (3) … (4) … (5) A party to proceedings in which a Registrar has exercised any of the powers of the Court under subsection (1) may, within the time prescribed by the Rules of Court, or within any further time allowed in accordance with the Rules of Court, apply to the Court to review that exercise of power. (6) The Court may, on application under subsection (5) or of its own motion, review an exercise of power by a Registrar pursuant to this section and may make such order or orders as it thinks fit with respect to the matter with respect to which the power was exercised. (7) … (8) In this section, Registrar means the Registrar, a Deputy Registrar, a District Registrar or a Deputy District Registrar of the Court. 20 Rule 3.11 provides that an application under s 35A(5) must be made within 21 days after the day on which the power was exercised. Rule 1.39 gives the Court the power to extend the time before or after it expires and regardless of whether an application for extension is made before the time expires. 21 The respondents submitted that s 35A is inapplicable, however, because at the time Ms Keys lodged her interlocutory application she was not a party to the proceedings, and if she had any right of review, it would be limited to judicial review. But Ms Keys was a party at the time the amended interlocutory application was filed. 22 The real questions are: (1) whether any of the powers Ms Keys seeks to have reviewed is a power of a Registrar exercised pursuant to s 35A; and (2) if so, whether the power or powers in question should be exercised any differently. 23 Neither party addressed the first question, although the respondents appeared to assume an affirmative answer was available. If that was the assumption, it was misguided. 24 Section 35A(6) does not confer a general power of review of decisions of a Registrar. The purpose of the review power in that subsection is to ensure that decisions of officers of the Court in the exercise of their delegated jurisdiction, powers and functions are subject to review or appeal by a judge or judges of the Court: see Harris v Caladine (1991) 172 CLR 84 at 95 (Mason CJ and Deane J). 25 With two exceptions, none of the powers Ms Keys sought to have reviewed under s 35A(5) was a power exercised under subs (1), that is to say, a power of the Court which the Court or a Judge has directed be exercised by a Registrar. A taxing officer does not exercise such a power: Territory Realty Pty Ltd v Garraway (No 3) [2013] FCA 914 at [21] (Mansfield J). Self-evidently s 35A does not apply to a power given directly to a Registrar, such as the power conferred by r 40.21(2) to direct that the taxation of the bill proceed. Moreover, even the broadest paragraph of s 35A(1) - para (1)(h) - does not apply to all the powers of the Court. Rule 3.01 provides that only the powers listed in that rule are prescribed for the purposes of s 35A(1)(h). The only relevant powers prescribed for these purposes are the power conferred by r 2.28 to make an order to remove from a court file documents accepted for filing and the power conferred by r 2.43 to order that money be paid out of the Litigants' Fund: see r 3.01(1)(b) and Sch 2 items 102A and 106. 26 Consequently, with the exception of the exercise by the Court of the powers under rr 2.28 and 2.43, the Court has no power under s 35A to review any of the decisions in question or to set aside the certificate of taxation. 27 Ms Keys did not rely on any other source of power. 28 Although there may well be a right to judicial review (under s 39B of the Judiciary Act 1903 (Cth) or the Administrative Decisions (Judicial Review) Act 1977 (Cth) or both), Ms Keys did not seek judicial review and it would be inappropriate to treat the present application as an application for judicial review. An application for an interlocutory injunction may only be brought to obtain orders in a proceeding which has already started: r 17.01. An application for judicial review would be a new proceeding. The Rules require a party seeking to make such an application to file an originating application: see rr 31.01, 31.11. Furthermore, the Registrar would be a necessary party to such a proceeding and the Registrar is not a party to the current proceeding. 29 Consequently, unless Ms Keys is successful in her application to review the Deputy District Registrar's decision in relation to the notice of objection to the costs estimate or in her stay application, the application to set aside the certificate of taxation must fail.
[2011] VSCA 55
(1994) 179 CLR 403
(2001) 15 NSWLR 333
(1991) 172 CLR 84
(1984) 3 FCR 344
(1979) 46 FLR 470