Deputy Commissioner of Taxation v Clear Blue Developments Pty Ltd [2010] FCA 1224 | Case summary

REASONS FOR JUDGMENT 1 Last Friday, 5 November 2010, I ordered that Clear Blue Developments Pty Ltd ACN 118 175 287 be wound up on the ground of insolvency pursuant to the Corporations Act 2001 (Cth) (Corporations Act): see Deputy Commissioner of Taxation v Clear Blue Developments Pty Ltd [2010] FCA 1223. 2 Upon my pronouncing that order, an application was made on behalf of the plaintiff, a Deputy Commissioner of Taxation (Deputy Commissioner) for costs. A separate application for costs was made on behalf of the supporting creditor, Holcim (Australia) Pty Ltd (Holcim). 3 The supporting creditor was represented by a firm of solicitors in private practice (Forbes Dowling Lawyers) with a member of that firm (Mr Morgan) appearing. In contrast, the Deputy Commissioner had appeared by a member of the Australian Public Service (Ms Cameron) employed within the Australian Taxation Office (ATO). Upon my enquiring of this officer as to the nature of costs which were sought on behalf of the Deputy Commissioner I was informed that an amount in respect of professional costs, as well as outlays, was sought. 4 There was no appearance by or on behalf Clear Blue Developments on the hearing of the winding up application. 5 On earlier occasions when I had dealt with winding up applications brought by a Deputy Commissioner of Taxation as Plaintiff, the right of audience relied upon had been that conferred on the Commissioner (including a Second or a Deputy Commissioner) and those of his officers authorised by him in writing in that behalf pursuant to s 15(1)(b) of the Taxation Administration Act 1953 (Cth) (TAA). On those occasions, no application, correctly, had been made for an allowance in respect of professional costs upon the making of a winding up order, only for an order in respect of outlays. That provision of the TAA does not confer a right of audience or practice in a legal professional capacity. Rather, it is partly declaratory in the sense that, as is the case with any litigant in person, it declares that the Commissioner may appear in a case under a taxation law which he has instituted and partly facultative in the sense that, doubtless for reasons of practical public administration, it allows the Commissioner in writing to appoint another person to appear for him. In either case though, where that right is exercised, the Commissioner is in no different position to any other litigant appearing in person. He has no right to an order in respect of professional costs, only to an order in respect of outlays. 6 A degree of novelty therefore attended the Deputy Commissioner's application for costs. The basis upon which the Deputy Commissioner might be entitled to an allowance in respect of professional costs was not immediately apparent to me but I was informed that one existed. The question arose late in the afternoon. Given that exigency and the absence of any appearance by or on behalf of Clear Blue Developments, as well as a desire on the part of the officer concerned fully to develop a supporting submission, it seemed to me that the interests of justice required that the question of costs be reserved with an opportunity being afforded to the Deputy Commissioner to file supporting written submissions. This he has done. 7 There was time on the day to hear a brief submission on behalf of Holcim in support of its application for costs. No question as to an ability to claim legal professional costs attended that application. Rather, the only substantive question was whether to make separate provision for Holcim's costs and, if so, in what amount? I deal with these questions at the conclusion of these reasons for judgment. 8 The originating process is dated 6 September 2010. On the first page of that document, adjacent to that date the following appears: A Walker (signature) ……………………….. Grahame Tanna, Solicitor for the Plaintiff Per: [Blank space] A solicitor employed in the same organisation as to the solicitor on the record 9 At the foot of the originating process and on later documents filed in the proceeding the following appears in the place where the name and address of a solicitor on the record would usually appear: Australian Taxation Office Legal Services Branch Level 13, Terrica Place Brisbane QLD 4000 Tel: (07) 3213 6043 Fax: (07) 3213 5005 Ref: Amanda Walker 10 The Deputy Commissioner's submission is that he has "conducted this litigation in the same manner as might any other litigant". It is submitted that, having regard to the "indemnity principle", as the successful party, the Deputy Commissioner has a prima facie entitlement to the exercise of a discretion for an order for costs in his favour. It is further submitted that: In the present matter the ATO in-house lawyers have been properly authorised to act in litigation on behalf of the Commissioner. The litigation is conducted by Mr Tanna, who holds an unrestricted practicing certificate, and by the employed solicitors who work under the control and supervision of Mr Tanna. 11 The factual basis for these or any other of the assertions in this submission is not evidenced. 12 Reference is made in the Deputy Commissioner's submission to the Legal Services Directions 2005 (Cth) made by the Attorney-General pursuant to s 55ZF of the Judiciary Act 1903 (Cth) (Judiciary Act). In terms of these directions, the ATO is an "FMA Agency" ie that office is a prescribed agency under the Financial Management and Accountability Act 1997 (Cth): see reg 5 and item 127 of Sch 1 to the Financial Management and Accountability Regulations 1997 made pursuant to that Act. 13 Materially, the effect of the Legal Services Directions is that an FMA Agency may only use an in-house lawyer to conduct litigation as solicitor on the record, or as counsel with the approval of the Attorney-General. In effect, the Legal Services Directions qualify the ability of the Commissioner to retain persons to conduct his legal business. The Attorney-General has conditioned his approval to the use of in-house lawyers for court litigation upon his being satisfied of criteria set out in [5.1] of the Legal Services Directions. It is not necessary for the purposes of this costs application to consider whether, for example, the ATO could be said, in terms [5.1(c)] of those directions, to be an agency which "has a statutory charter which gives it an operation independent of government". 14 What the Legal Services Directions do not do is to create any special right of audience for those officers of the Australian Public Service employed within the ATO. Rather, the directions are but a formal manifestation, made pursuant to statute, of an authority customarily possessed by an Attorney-General under our system of government as the Crown's first Law Officer to conduct and control litigation by or on behalf of the Crown and emanations of the relevant body politic. No issue has been raised in this case of the validity of any retainer. 15 Reference was then made in the Deputy Commissioner's submissions to the Legal Profession Act 2007 (Qld) (LPA). The following submission was made by reference to that Act: 9. In-house legal work is conducted by the ATO Legal Services Branch, which is an internal division within the ATO that provides specialised in-house legal advice to, and acts upon the instructions of, other divisions within the ATO. The Legal Services Branch is not a separate and/or external law practice and there is no requirement under the LPA or the Judiciary Act of rit to be so, in order for the Commissioner to appoint one of his in-house lawyers to act as the solicitor on the record. 10. In proceedings in Queensland where the Commissioner uses his in-house lawyers to conduct litigation as solicitor on record, he appoints his delegate - the Assistant Commissioner of Taxation Litigation, Northern Region, Law and Practice - who holds an unrestricted practicing certificate in New South Wales, as the solicitor on the record. 11. Additionally, in matters where the Commissioner's in-house lawyers conduct litigation as solicitor on the record, the ATO employed legal officer with the carriage of the mater who is under the supervision of the Assistant Commissioner of Taxation, Litigation, will be an admitted lawyer who falls within the meaning of a government legal officer engaged in government work: ss. 5 & 12 LPA. 12. In this way, the Commissioner does not contravene the prohibitions placed upon legal practice contained in the LPA or the conditions placed upon Australian lawyers who fall within the definition of a government legal officer. The ATO Legal Services Branch has sufficient structures in place to comply with the requirements set out in the LPA and therefore the Commissioner is entitled to use his in-house lawyers to conduct litigation as solicitor on the record. 16 Though not expressly stated in the submission, I assume that it is Mr Tanna who is the "Assistant Commissioner of Taxation, Litigation, Northern Region, Law and Practice" and that it is he who holds an unrestricted practising certificate in New South Wales. 17 It was further submitted that there was nothing in the Federal Court Rules which "hindered or prevented" the Commissioner from acting in the manner set out in the submission. The address in the footer of the originating process (set out above) was said to be "the address used by Mr Tanna when conducting business in Brisbane. Accordingly, it is an address within Australia where documents may be delivered or posted to the solicitor for the Commissioner". It was submitted that this complied with the requirements of O 7 r 6(1) and O 7 r 6(2) of the Federal Court Rules. 18 More generally, reference is made in the submission to a line of authority which is said to support the proposition that a solicitor employed by a corporation or as "an employee of the Crown" had an entitlement to have his or her costs assessed on the ordinary basis. 19 At a very general level of abstraction, so much may be accepted but care needs to be taken when considering such authorities to understand the basis upon which the right to practise as a solicitor (including an ability to recover legal professional costs) was grounded. Where such a right exists, it is no answer to an application for professional costs that the legal practitioner concerned is a salaried officer: see Inglis v Moore (No 2) (1979) 46 FLR 470. It is therefore to the subject of the right of a lawyer employed within the ATO to practise as a solicitor and whether there is such a lawyer who is "solicitor on the record" in terms of the Federal Court Rules that I now turn. 20 In ss 55E, 55F, 55G and Pt VIIIB of the Judiciary Act, the Commonwealth Parliament has made express provision for, respectfully, "Attorney-General's lawyers" and "AGS lawyers" to have particular rights of practice including an ability to recover professional costs, irrespective of whatever provision there may otherwise be under State law for them to conduct legal business. Such particular provision by Parliament in respect of rights of practice, confined to a narrow class of Commonwealth "in-house" lawyers, is no coincidence. In Waterford v Commonwealth (1987) 163 CLR 54 at 72-73, Sir Gerard Brennan observed: The disincentive of sanctions which professional disciplinary tribunals may impose for breaches of ethical rules is diminished when the breach is committed in the interests of an employer and the security and environment of employment tend to insulate a salaried lawyer from the chief disciplinary influence of the profession - the opinion of one's professional peers. I am therefore unable to accept the notion that salaried lawyers are generally to be assimilated to the position of the independent legal profession for the purpose of determining the availability of legal professional privilege. Although this view may seem to give insufficient acknowledgment to the personal integrity, as well as the competence, of many salaried lawyers, we are concerned with a general legal rule which is framed not with regard to the characteristics of individuals but with regard to the influences that naturally attend the relationship of employer and employee. However, those influences are not so significant when the legal adviser is in the employment of the Crown. Then the adviser's independence is protected in the manner to which Mason J. and I referred in Attorney-General (N.T.) v Kearney: "The independence of State Crown Solicitors and the Australian Government Solicitor in the giving of legal advice is - or ought to be - protected by the respective Attorneys-General as the first law officers of the Crown, and is buttressed by the laws relating to the public service and sometimes by specific legislation." The Commonwealth, State and Territorial statutes under the officers are employed in the offices of Crown Solicitors, the Australian Government Solicitor and in the Departments of the respective Attorneys-General give them a certain security of tenure and those statutes would be construed, in the absence of contrary express provisions, as leaving these officers completely professional independent. The protection of the respective Attorneys-General, as the first Law Officers of the Crown, should extend to all of these officers, so that none of them will be affected in the performance of their professional duty by any sense of loyalty or duty to, or hope of reward from, the government of the day. [citations omitted] 21 I respectfully agree with these observations. They accord with my own experience both when in practice and as a judge. I had occasion last year in my capacity as Tax List Coordinating Judge for the Queensland Registry to be reminded of the difficulties that can attend taxation liability litigation when the Commissioner chooses neither to engage the Australian Government Solicitor nor a private firm of solicitors to act for him as solicitor on the record: see Pacific Exchange Corporation Pty Ltd v Commissioner of Taxation (2009) 180 FCR 300 at [54] - [59]. In that case a member of the Queensland Bar appeared for the Commissioner directly briefed by him, via his Legal Services Branch. On that occasion, unlike the present, an officer of that branch did not seek or claim to be solicitor on the record. 22 No officer within the ATO Legal Services Branch is either an Attorney-General's lawyer or an AGS in terms of the Judiciary Act. Entitlement to practise as a solicitor before this Court must therefore depend upon the operation of s 55B and s 55C of the Judiciary Act in conjunction with the local Queensland legislation regulating the legal profession, the LPA. 23 If such a right to practise exists and if that right is exercised by acting as solicitor on the record as required by the rules of court, the Commissioner will indeed, as a successful party to litigation, have a prima facie right to an award of costs in his favour. 24 For the purposes of s 255-5(1) in Sch 1 to the TAA, the running balance account debt which grounds the statutory demand is a debt owed to the Commonwealth and payable to the Commissioner. Pursuant to s 255-5(2) of Sch 1 to the TAA a Deputy Commissioner is entitled to sue in a court of competent jurisdiction for the recovery of that debt. A winding up application in this Court by a Deputy Commissioner falls within the authority conferred by that provision. For the purposes of s 64 of the Judiciary Act, the application is also one to which "the Commonwealth" is a party. That being so and subject of course to any more particular provision under Commonwealth law (and none is relevant), the Commonwealth, here the Deputy Commissioner, may, materially, be awarded costs as in a suit between subject and subject. 25 Subject to presently immaterial exceptions, a discretionary power to award costs is conferred on this Court by s 43 of the Federal Court of Australia Act 1976 (Cth). Though discretionary, the power to award costs must be exercised judicially, not capriciously. This means that, usually, it will be exercised in a way such that costs follow the event. In a winding up application instituted by a private creditor represented by a solicitor entitled to practise that would therefore mean that, again usually, a winding up order, if made, would be on terms that granted an order for costs in favour of the creditor extending to that creditor's party and party legal costs. Such costs would then be paid pursuant to s 466 of the Corporations Act. In the same way, if the successful plaintiff creditor were a Deputy Commissioner who was represented by a solicitor entitled to practise the effect of s 64 of the Judiciary Act would be that the Deputy Commissioner was entitled to an order for costs which included legal professional costs. 26 The position with respect to the conjunctive operation of s 55B and s 55C of the Judiciary Act and State legislation conferring an entitlement to practise is as described by Gummow J (with whom Hayne J agreed in this regard) in APLA Ltd v Legal Services Commissioner (2005) 224 CLR 322 at [185] - [186] (APLA Case): 185. In De Pardo v Legal Practitioners Complaints Committee, the Full Court of the Federal Court held that there was no inconsistency between the provisions of the Legal Practitioners Act 1893 (WA) and Pt VIIIA of the Judiciary Act; to the contrary, the legislative scheme apparent in Pt VIIIA is complementary to the provisions of the State legislation regulating the admission and control of legal practitioners. Thus, s 55B assumes the existence of provisions of State law entitling a person to practise as a barrister and solicitor in State Supreme Courts and s 55D assumes the existence of provisions in State law for the suspension or removal of that entitlement. Further, s 55E assumes the existence of State laws imposing rights, duties or obligations on legal practitioners in relation to their clients or to the courts, and providing for disciplinary proceedings. 186. In De Pardo, French J explained that the power in a federal court to regulate the conduct of legal practitioners appearing before it to the extent necessary to ensure the observance of their duties to the court and the integrity of its procedures is an implied incidental power, with its source in Ch III of the Constitution. In that regard, his Honour referred to what had been said in this Court respecting the power to deal with contempts in Re Colina; Ex parte Torney. His Honour added: "All that having been said, the implied incidental powers thus exercisable by federal courts do not impinge in any way upon the legislative frameworks for disciplining practitioners under the supervision of the Supreme Courts of the States and Territories." [footnotes omitted] 27 For the purposes of this application I assume the correctness of Ms Cameron's statement from the Bar Table that she and each of Mr Tanna and Ms Walker is admitted as a legal practitioner in an Australian jurisdiction and a person whose name is entered on the roll of practitioners kept by the Principal Registrar of the High Court for the purposes of s 55B and s 55C of the Judiciary Act. 28 For completeness, I should record that no submission was made that s 15(1)(a) of the TAA conferred on any officer of the ATO who was a person enrolled as a barrister, solicitor, barrister and solicitor or legal practitioner of a federal court or of the Supreme Court of a State or Territory a right to represent the Deputy Commissioner. Read in context, that provision appears to be directed to representation by a practitioner outside the Commissioner's office who is entitled to engage in legal practice. 29 Having regard to what was said by Gummow J in the APLA case, it becomes necessary to consider whether the persons mentioned but in particular Mr Tanna are practitioners who have satisfied all the conditions necessary to establish a rightful claim to practice under the LPA. 30 Subsection 24(1) of the LPA sets out a general position. It provides that a person must not engage in legal practice in Queensland unless the person is an Australian legal practitioner. That prohibition does not, materially, apply to engaging in legal practice under the authority of a law of Queensland or of the Commonwealth. The provisions of the Judiciary Act relating to Attorney-General's lawyers and AGS lawyers exemplify an authority under a law of the Commonwealth to engage in legal practice. The prohibition found in s 24(1) also does not apply to, again materially, "a government legal officer engaged in government legal work": s 23(1)(b) of the LPA. 31 Section 12 of the LPA gives meaning to the terms "government legal officer" and "engaged in government work". Thus, s 12(1) and 12(2) of the LPA provides: (1) A government legal officer is a person whose employment or appointment in any of the following includes or may include engaging in legal practice - (a) a department of this jurisdiction, the commission, or an agency prescribed under a regulation; (b) a department of government of the Commonwealth; (c) a department of government of another jurisdiction; (d) an agency of another jurisdiction if, under a corresponding law of that jurisdiction, a person engaging in legal practice for the agency is exempted from holding a practising certificate or otherwise does not require a practising certificate. (2) A government legal officer is engaged in government work when the government legal officer is engaged in legal practice in the course of the officer's duties for the entity in relation to which the person is an employee or appointee. Example of engaged in government work - A public service officer employed by the Department of Justice and Attorney-General is engaged in legal practice at the Department of Education. The officer's duties for the Department of Justice and Attorney-General while working at the Department of Education include providing advice to that department as a client of the Department of Justice and Attorney-General. 32 It might be thought that there is some tension between being a person who, in terms of s 12(1)(b) of the LPA, is employed in a department of government of the Commonwealth and a person who for the purposes of [5.1] of the Legal Services Directions made pursuant to the Judiciary Act is employed in an agency which is "independent of government". Be this as it may, I shall assume for the purposes of this application that each of the legal practitioners concerned (Mr Tanna, Ms Walker and Ms Cameron) is a person whose employment is in a department of government of the Commonwealth. Support for that assumption is to be found in both a purpose of reading of s 12(1)(b) of the LPA and the fact that the ATO is an agency within the Department of the Treasury. 33 Section 44 of the LPA provides: 44 Entitlement to practise in this jurisdiction (1) An Australian legal practitioner is, subject to this Act, entitled to engage in legal practice in this jurisdiction. (2) Also, a government legal officer engaged in government work is, subject to this Act, entitled to engage in legal practice in this jurisdiction as a government legal officer even though the government legal officer is not an Australian legal practitioner. (3) Subsection (2) does not prevent a government legal officer from being the holder of a local practising certificate. 34 The institution and prosecution of a winding up application by a Deputy Commissioner is "government work". Each of Mr Tanna, Ms Walker and Ms Cameron is "government legal officer". Of them, Mr Tanna additionally holds a practising certificate but that is not, in terms of the LPA, a "local practising certificate". Rather, Mr Tanna holds a practising certificate in New South Wales. He is also in terms of the LPA an "interstate legal practitioner". Only Mr Tanna is put forward as the person who is said to be the solicitor on the record for the Deputy Commissioner. 35 Section 74 of the LPA imposes a professional indemnity insurance requirement covering practice in Queensland upon interstate legal practitioners. By virtue of s 74(3), that requirement does not apply to an interstate legal practitioner who is a government legal officer who: (b) is engaged in legal practice in this jurisdiction only to the extent that the practitioner is engaging in government work; and (c) has an indemnity or immunity, whether provided by law or governmental policy, that is applicable in relation to that practice. 36 Assuming for the moment that by, on one view, at least purporting to be solicitor on the record in the present proceeding, Mr Tanna is engaged in legal practice in Queensland only to the extent that he is engaged in government work, a question arises as to whether he has in terms of s 74(3)(c) of the LPA, "an indemnity or immunity, whether provided by law or government policy, that is applicable in relation to that practice"? I have neither direct evidence nor assertion from the Bar table before me on that subject. 37 Mr Tanna is employed not by the Commissioner of Taxation but rather by the Commonwealth of Australia. In the ordinary course of events, one might assume that the Commonwealth would be vicariously liable for any negligent acts or omissions on his part in acting as a government legal officer. Whether the indemnity would extend beyond negligent acts or omissions is moot. As I say, on the subject of whatever indemnity he enjoys, there is neither direct evidence nor assertion. Perhaps there is an inference arising from Mr Tanna's possession of an unrestricted practising certificate in New South Wales that he does carry indemnity insurance for the purposes of the legislation governing practice in that State. Again though, I do not have any evidence as to whether any such indemnity insurance covers legal practice by him in Queensland. 38 Reading s 44(2) and s 74(3) together, as the proviso "subject to this Act" in s 44(2) requires, the position which in my opinion prevails is that a government legal officer who is an interstate legal practitioner must not engage in legal practice in Queensland unless, materially, that officer "has an indemnity or immunity" whether provided by law or government policy, that is applicable in relation to that practice. I am not satisfied that Mr Tanna has such an indemnity or immunity. It follows that I am not satisfied that he is entitled to practise in Queensland. 39 An absence of entitlement to practise is, in my opinion, a basis to refuse to make an order in respect of professional costs. 40 Assuming though that this understanding of the operation of s 44 in conjunction with s 74 is incorrect or that I am incorrect in concluding that there is no evidence of the nature and extent of the indemnity or immunity Mr Tanna enjoys, is there any other basis upon which, contrary to the submission made on behalf of the Deputy Commissioner, professional costs should be refused? The absence of a contradictor does not, after all, convert any absence of entitlement to such an order into an entitlement. 41 The Federal Court Rules permit a party to act by a solicitor: O 45 r 1(1). Order 7 r 6(2) requires that, if a person is represented by a solicitor, the address for service for the person must be the address of the solicitor or of the solicitor's agent. The reference to "solicitor's agent" in this rule is necessarily a reference to another solicitor having regard, for example, to O 45 r 4 and O 7 r 4A(1). 42 Order 41 r 3(1) of the Federal Court Rules provides: Details to be shown on first page of a document (1) A document prepared by a party for use in the Court shall have a horizontal line drawn at the foot of the first page below which shall be shown: (a) the party on whose behalf the document is filed, the name, address, telephone number and, if applicable, the facsimile number and the email address of the solicitor for the party, and, if the solicitor acts in the proceedings by an agent, the name, address, telephone number and, if applicable, the facsimile number and the email address of the agent; and (b) where a notice for service at a document exchange is filed under Order 7, paragraph 7 (1)(a), the exchange box number. 43 This originating process does not comply with the requirements of O 41 r 3(1) if it be the case that a solicitor is acting for the Deputy Commissioner. The name of the solicitor, which the typed annotation elsewhere in the document (set out above) might suggest is Mr Tanna, does not appear. Ms Walker's name does appear but she is not said on the document to be Mr Tanna's solicitor agent, only a point of reference within the Legal Services Branch of the ATO. The Legal Services Branch of the ATO is not the name of a firm of solicitors, only of an administrative division within an agency of the Commonwealth Executive Government Moreover, the document is expressed in this first page footer to be filed by the Plaintiff Deputy Commissioner rather than on behalf of the Deputy Commissioner. The footer looks to be more appropriate to a document prepared by a party not represented by a solicitor. In such an instance O 41 r 3(2) provides: (2) Where a party preparing a document for use in the Court is not represented by a solicitor, paragraph (1)(a) does not apply but instead the name and address for service of the party, and, if applicable, his or her telephone number, facsimile number and email address, must be shown. 44 On page 3 of the originating process it is stated that the plaintiff's address for service is: Australian Taxation Office Legal Services Branch Level 13, Terrica Place 140 Creek Street BRISBANE QLD 4000 45 Again, there is no reference in this address for service to either Mr Tanna or to Ms Walker acting as a solicitor for the Deputy Commissioner. Indeed, there is here no reference to either of them at all. Again, if a solicitor were acting for the Deputy Commissioner one might expect to see in the "service" portion of the originating process a statement that the plaintiff's address for service is at the office of his solicitor naming that practitioner and his professional capacity and giving the address of that person's professional office. Alternatively, if a local agent solicitor were acting one might expect to see a statement in respect of service specifying the name and professional capacity of the solicitor acting as agent, the name of the principal solicitor and the address of the solicitor agent as the address for service of the plaintiff. 46 Later documents filed in the proceeding do not in the footer make any reference to a solicitor acting for the Deputy Commissioner. Rather, they contain but a generalised reference to the ATO "Legal Services Branch". Some documents, for example, affidavits, do though contain a certificate of compliance which purports to be signed on behalf of Mr Tanna as solicitor for the plaintiff. 47 All in all, the position which obtains is a confusing one. That confusion is caused by a failure to adhere to the requirements of the Federal Court Rules in relation to a signification of a party acting by a solicitor. Tellingly, in relation to the giving an address for service, there is nothing which alerts the defendant corporation to the fact that a solicitor acts for the plaintiff. I am not persuaded that there is a solicitor on the record. 48 In the face of that and having regard to the requirements of the Federal Court Rules, the officers and members of Clear Blue Developments were, in my opinion, entitled to assume that, in the event of a winding up order being made, costs of the plaintiff would be limited to outlays, as is the case where a litigant acts for him or herself. For this reason also, I do not propose to award professional costs to the Deputy Commissioner. Indeed, so to do would be to reward work which is not of a standard to be expected of a person asserted to be solicitor on the record for a person to whom model litigant obligations adhere. The Deputy Commissioner's outlays are said to be $1,248.86. I order that those costs be the Deputy Commissioner's costs in the winding up. 49 I turn then to the costs of the supporting creditor, Holcim. Holcim's position was that, though it supported the Deputy Commissioner's application for the winding up of Clear Blue Developments, it was concerned that this only occur according to law. It was on that basis that its solicitor, Mr Morgan, properly and commendably drew attention to a line of authority which at the very least gave pause for thought as to whether there was proof of service of the statutory demand before the Court. Mr Morgan's submissions assisted the answering of that question. The appearance of the supporting creditor could hardly be described as an unnecessary indulgence. 50 I am persuaded that an order for costs should be made in favour of Holcim in respect of the hearing of the winding up application. It already has the benefit of an order for costs, fixed in the sum of $330, in respect of an earlier appearance. The latter accords with the hourly rate for an appearance by a solicitor in court before a judge or a registrar (Item 36 in Sch 2 to the Federal Court Rules). In support of his submission for costs, Mr Morgan made reference to the hourly rate payable by agreement between solicitor and client and to the length of time in which he had been engaged on the hearing. This was to the end of submitting that Holcim ought to be allowed its costs on other than the usual, party and party basis. 51 It is true that the discretion which I possess in respect of the awarding of costs extends to the awarding of costs on other than a party and party basis. It is also true that the classes of case in which costs may be awarded on an indemnity is ultimately open-ended: Colgate Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225. Such matters acknowledged, when all was said and done and notwithstanding a wider systemic importance of the point raised concerning proof of service, the case is not one in which I am persuaded that I ought to make an order for Holcim's costs on other than a party and party basis. In particular, I do not consider that whatever would be available for distribution amongst the creditors of Clear Blue Developments after allowing for the Deputy Commissioner's costs, Holcim's party and party costs and the costs of the administration should additionally be reduced by an additional amount in respect of Holcim's costs if allowed on an indemnity basis. On a party and party basis, the maximum amount allowable in respect of an appearance of a solicitor on a given day is $1,481 (Item 36). The length of Mr Morgan's necessary attendance was such as to yield an entitlement to this maximum. I shall therefore order in respect of the hearing of the winding up application on 5 November 2010 that Holcim's costs be fixed in the sum of $1,481 and that those costs be costs in the winding up and accorded the same priority as if Holcim had been the plaintiff. 52 There will be orders accordingly. I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan.

Deputy Commissioner of Taxation v Clear Blue Developments Pty Ltd

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