Fewin Pty Ltd v Burke [2017] FCA 693 | Case summary

Fewin Pty Ltd v Burke [2017] FCA 693 | Case summary | Zoe

[14]

MARKOVIC J: 1 This is an application for a lump sum costs order by each of John Christopher Burke, the Official Trustee in Bankruptcy (Official Trustee) and Maxwell William Prentice, the first, second and third respondents respectively to this proceeding, and the Inspector-General in Bankruptcy (Inspector-General). 2 The background to these applications can be briefly stated. 3 The proceeding was commenced by the filing of an originating application on 14 October 2015. The proceeding, insofar as orders pursuant to s 179 of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) were sought, was set down for hearing for four days commencing on 5 September 2016. 4 On 6 September 2016 the hearing date was vacated. The applicants, Fewin Pty Ltd (Fewin), Ronald Michael Coshott, Ljiljana Coshott and Robert Gilbert Coshott, were granted leave to file an amended statement of claim, the effect of which was to abandon any claim pursuant to s 179 of the Bankruptcy Act. The applicants were ordered to pay the Official Trustee's and Mr Prentice's costs of the applications pursuant to s 179 of the Bankruptcy Act on an indemnity basis and to pay Mr Burke's costs of the applications pursuant to s 179 of the Bankruptcy Act on the usual basis. 5 The proceeding was then set down for hearing for five days commencing on 12 December 2016. On the first morning of the hearing orders were made by consent as between the applicants and the Official Trustee, which included an order that the originating application against the Official Trustee be dismissed and that the applicants pay her costs as agreed or taxed on a party-and-party basis. On the second day of the hearing further orders were made as between the applicants and Messrs Burke and Prentice, including an order granting leave to the applicants to file and serve a notice of discontinuance of the whole of the proceeding and an order that the applicants pay Messrs Burke and Prentice's costs of the proceeding on an indemnity basis. On the making of those orders Messrs Burke and Prentice immediately foreshadowed applications for lump sum costs orders against the applicants. 6 Subsequently, the Official Trustee joined in the application for a lump sum costs order of her costs of the proceeding and the Inspector-General, who has the benefit of two costs orders made in her favour in the proceeding, made an application for a lump sum costs order. On 12 May 2016 an application to join the Inspector-General to the proceeding had been dismissed and the applicants were ordered to pay the Inspector-General's costs of that application. On the same date a subpoena issued to the Inspector-General at the request of the applicants had been set aside. On 23 June 2016 the applicants were ordered to pay the Inspector-General's costs of the application to set aside the subpoena on an indemnity basis.

[15]

Principles 7 The Court's jurisdiction to award costs in favour of a party is found in s 43 of the Federal Court of Australia Act 1976 (Cth). Relevantly, s 43(3)(d) provides that the Court or a Judge may, among other things, award a party costs in a specified sum. 8 Rule 40.02(b) of the Federal Court Rules 2011 (Cth) (Rules) provides that a party or a person who is entitled to costs may apply to the Court for an order that costs be awarded in a lump sum, instead of, or in addition to, any taxed costs. 9 The Court's Costs Practice Note (GPN-Costs) (Costs Practice Note) applies to all proceedings in the Court. Among other things, it addresses the topic of costs obtained by a lump sum costs order, setting out in some detail the procedure to be adopted by the parties where such an application is made. This relevantly includes: Material in Support 4.10 Unless the Court otherwise directs, no formal application for a lump-sum costs order is required. However, in cases where a lump-sum costs procedure is to take place, the Costs Applicant should file an affidavit in support of the lump-sum claim ("Costs Summary") in accordance with the timetable set by the judge. The Costs Summary should succinctly address the relevant matters set out in Part B of "Annexure A - Guide for Preparing a Costs Summary" and must also verify the matters set out in Part A of Annexure A. 4.11 The Costs Summary must be clear, concise and direct and not resemble a bill of costs in taxable form, nor should it contain submissions on the law. The intention of the lump-sum costs procedure is to streamline and expedite the determination or resolution of the quantum of costs question and not to replicate the taxation process. 4.12 Unless leave is given by the Court in advance of filing, the Costs Summary must not exceed 5 pages in length (omitting formal parts) or, in large or complex cases, no more than 10 pages. The Costs Applicant is not required to exhibit to the Costs Summary the source material verifying the costs and disbursements claimed. However, such material must be available at the costs hearing. Material in Response 4.13 The Costs Respondent may file an affidavit responding to the matters raised in the Costs Summary ("Costs Response") in accordance with the timetable set by the judge. 4.14 Any Costs Response must be clear, concise and direct and briefly summarise the categories of any disputes arising in respect of the Costs Summary. The summary should not resemble formal costs objections (as prepared for a taxation of costs) nor contain submissions on the law. The Costs Response should make clear which of the costs issues arising from the Costs Summary are in dispute and which are not, and should not exceed 4 pages in length (omitting formal parts) or, in large or complex cases, no more than 8 pages. 10 The Court's power to order lump sum costs is discretionary. It is not confined and may be exercised whenever the circumstances warrant it: Su v Australian Fisheries Management Authority (No 3) [2008] FCA 2018 at [1] (per Reeves J). 11 In Dunstan v Human Rights and Equal Opportunity Commission (No 3) [2006] FCA 916 Mansfield J set out some of the factors relevant to the exercise of the Court's discretion to order lump sum costs pursuant to O 62 r 4(2)(c) of the former Federal Court Rules at [23]-[24] as follows: 23 There is no particular characteristic of a case which must exist before a gross sum costs order can be made: Australasian Performing Rights Association Ltd v Marlin [1999] FCA 1006. It is a power which may be exercised whenever the particular circumstances of the case warrant it: Beach Petroleum NL v Johnson (1995) 57 FCR 119 (Beach); Harrison v Schipp (2002) 54 NSWLR 738. 24 Factors which have been considered when exercising the discretion to make such an order include - • where the delay, expense and inconvenience of taxing costs in the normal manner would be unduly protracted or unduly expensive: Beach at 120; Charlick Trading Pty Ltd v Australian National Railways Commission [2001] FCA 629 (Charlick); Foyster v Foyster Holdings (2003) 44 ACSR 705; and • where the financial capacity of the party liable to pay costs is such that the additional cost of taxation will impose a significant burden on the party in whose favour costs are ordered without real prospects of recovering those costs: Hadid v Lenfest Communications Inc [2000] FCA 628; Sparnon v Apand Pty Ltd (unreported, von Doussa J, 4 March 1998); Sony Entertainment (Australia) Ltd v Smith (2005) ALR 788. … 12 The Court has also recognised that it is appropriate to use the lump sum costs order procedure in cases which are simple and in which "there would be utility in the [C]ourt cutting the Gordian knot of protracted fights about costs": Keen v Telstra Corporation Limited (No 2) [2006] FCA 930 at [6] (per Rares J). In that case, Rares J also observed that the purpose of a lump sum costs order is to save the parties the time, trouble, delay, expense and aggravation in having to proceed to a taxation of costs. 13 In Clipsal Australia Pty Ltd v Clipso Electrical Pty Ltd [2016] FCA 37 Perram J said in relation to the Court's power to award lump sum costs at [9]-[10]: 9 … The circumstances in which such an order may be made are not closed but include the avoidance of the delay, expense and aggravation arising out of taxation: Beach Petroleum NL v Johnson (1995) 57 FCR 119 at 120 per Von Doussa J. I do not think that that is germane in this case since even if I make the orders sought by the applicants there will still be other costs orders at the conclusion of the trial that will likely require taxation. 10 Such an order may also be appropriate where the proceedings are complex and where it may be more efficient for a trial judge to determine the issue of costs than to condemn the parties to a taxation: Sony Entertainment (Australia) Limited v Smith (2005) ALR 788 at [189]ff per Jacobson J. Another reason to make such an order will arise in those cases where there is a basis to think that the costs of the taxation themselves may turn out to be irrecoverable (Sony at [195]) or where one party has been particularly truculent so that it may be thought just to spare the other from the inconvenience of further engagement over the process of taxation: Ariix LLC v Mahilall (No 2) [2014] FCA 494 at [10] per Rares J. Another circumstance sometimes thought relevant is where a party has failed to appear: Sony at [193]. 14 As to the determination of the appropriate quantum of a lump sum costs order in Bitek Pty Ltd v IConnect Pty Ltd [2012] FCA 506 (Bitek) Kenny J said at [18]: The starting point for the fixing of costs is the charges rendered by the applicant's solicitors: Beach Petroleum at 124 and Hamod v State of New South Wales and Anor [2011] NSWCA 375 at [820] per Beazley JA (with whom Giles and Whealy JJA agreed). The sum of costs fixed should also be proportionate to the nature, including the complexity, of the case: see Canvas Graphics Pty Ltd v Kodak (Australasia) Ptd Ltd [1998] FCA 23. As Beazley JA said in Hamod, at [820], citing, amongst others, Beach Petroleum at 123: The approach taken to estimate the costs to be ordered must be logical, fair and reasonable … . This may involve 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 … . (Citations omitted.)

[16]

Evidence 15 Mr Burke relies on an affidavit sworn by James Tom Johnson, barrister, on 24 February 2017 in support of his claim for a lump sum costs order. 16 Mr Johnson was admitted to the Bar in 1991, having previously practised as a solicitor. He acted for Mr Burke in this proceeding on the basis of a direct access brief. With the exception of the hearing of the application for a gross sum costs order, at which Ms Castle of counsel appeared on Mr Burke's behalf, Mr Johnson is the only person who has acted for Mr Burke and who has carried out the work the subject of Mr Burke's claim for a lump sum costs order. 17 Relevantly Mr Johnson gives the following evidence: (1) he refers to his fee disclosure and costs agreement dated 22 October 2015 and addressed to Mr Burke. He also refers to two itemised tax invoices addressed to Mr Burke, one being a disbursements-only tax invoice for a filing fee of $465 inclusive of GST and the other being for all attendances undertaken by Mr Johnson on behalf of Mr Burke in a total sum of $82,165.21 inclusive of GST, which are annexed to the submissions that were filed on behalf of Mr Burke; (2) he has considered the Court's National Guide to Counsel Fees issued 28 June 2013 (Guide to Counsel Fees) and believes that the rates and charges that he seeks to recover from Mr Burke are at the upper end of, but within, the range included therein, excluding GST; (3) he believes that there were economies achieved in the way the work was performed by him on behalf of Mr Burke because he had advised Mr Burke in his capacity as trustee of the estate of Robert Gilbert Coshott, including in a proceeding in the Supreme Court of New South Wales which was brought by Fewin, Ronald Coshott and Ljiljana Coshott on substantially the same grounds as were articulated in this proceeding; (4) at a time when he was also instructed to act for Mr Prentice the costs were apportioned by arrangement so that they were incurred jointly on behalf of Mr Burke and Mr Prentice on the basis of a 50/50 apportionment; (5) there is no component in his bill of costs for "skill, care and responsibility" as that is included in his hourly rate identified in the costs agreement; (6) Mr Burke has and will incur further costs from those included in the tax invoices that have been rendered in a total amount of $2,750 inclusive of GST; and (7) the total amount of Mr Burke's present and future costs is $84,280.21 inclusive of GST.

[17]

Submissions 18 Ms Castle of counsel appeared on behalf of Messrs Burke and Prentice at the hearing of their applications for gross sum costs orders. Accordingly, a number of submissions common to both of their applications were made. It is convenient that I set those out at this point. 19 It was submitted that there were two questions that arose for determination. The first was whether a lump sum costs order ought to be made and the second was the quantum of any such order. 20 In relation to the discretion to award lump sum costs, by reference to the authorities, Ms Castle made the following submissions on behalf of Messrs Burke and Prentice: (1) the power to award lump sum costs may be exercised whenever the circumstances warrant it. There is no particular characteristic of a case which must exist before such an order can be made and, while historically such orders were made in "mega-litigation", a lump sum costs order is also appropriate in a simple matter where it will save the parties the time, trouble, delay, expense and aggravation of having to proceed to a taxation; (2) the conduct of the party ordered to pay costs is a matter that can be taken into account in the exercise of the discretion to award lump sum costs, relying on Bitek at [17]. In the present case the applicants brought an application that was effectively abandoned; a new case was then pleaded which led to a hearing; and, after the parties' openings, the applicant sought to discontinue. That conduct reflects the expense and aggravation to which the respondents were put in essentially preparing for two cases, neither of which proceeded. In those circumstances Messrs Burke and Prentice contended that the degree of inconvenience and expense they have experienced would be well met by an order for lump sum costs, which would obviate the need to experience a further delay in the quantification of the costs awarded to them; (3) this is a case where the way in which the proceeding was conducted by the applicants wasted the successful parties' resources. Messrs Burke and Prentice submitted that this was a further matter that could be taken into account because of the applicants' failures to comply with the Court's orders on numerous occasions and because of their failure to pay previous costs orders; and (4) costs orders made in the applicants' favour in other proceedings against Messrs Burke and Prentice are irrelevant. 21 In relation to the quantum of any order Ms Castle made the following submissions on behalf of Messrs Burke and Prentice: (1) in determining quantum a court is entitled to take into account the evidentiary material before it, the court's own observation of the proceeding and the judge's own experience; (2) the starting point for fixing costs is the charges rendered by the solicitors acting for the party to whom costs have been awarded, assuming that that party has a liability to pay legal costs, which must first be established; (3) the costs claimed should be proportionate to the nature of the case, including its complexity. That is a qualitative assessment; (4) there are two ways that a court might approach quantum. The first is to take a "broad brush" approach and not delve into the detail; and the second is for the court to be taken, to some extent, to the detail and to be satisfied that the costs claimed are appropriate. In circumstances where Messrs Burke and Prentice have the benefit of indemnity costs orders obtained with the consent of the applicants, the Court would not be too concerned to undertake an item by item consideration of the costs claimed. The Court would not necessarily make any reduction in the amounts claimed because those amounts are reasonable in light of the indemnity costs order; and (5) in this case expert evidence in relation to quantum is not required because of the degree of detail provided to the Court by Messrs Burke and Prentice of the costs incurred by them in the proceeding. 22 More specifically, in relation to quantum, Mr Burke submitted that because Mr Johnson acted for him on a direct access basis the Court would be justified in looking at the matter from a different point of view. That is, he contended that, while Mr Johnson was required to do things that counsel might not ordinarily do, overall the saving on fees was considerable by not having the involvement of a solicitor. Mr Burke then submitted that: (1) based on the fee disclosure and costs agreement dated 22 October 2015 there was clearly liability on his part to pay; (2) the detailed tax invoice dated 15 December 2016 shows that, in accordance with his fee disclosure and costs agreement, Mr Johnson charged Mr Burke $500 per hour for work undertaken by him but for appearing at the hearing he charged $4,000 per day, which was less than the daily hearing fee included in the fee disclosure and costs agreement. No criticism could be made for Mr Johnson charging less than the amount Mr Burke was otherwise contractually liable to pay; (3) the rates charged by Mr Johnson comfortably fit within the range included in the Guide to Counsel Fees and they were justified given Mr Johnson's seniority and expertise in the area of bankruptcy law; (4) Mr Johnson has had considerable involvement in matters concerning the bankrupt estate of Robert Coshott that have been filed in this Court and was able to bring that knowledge, and the associated efficiencies, to bear in acting in this matter; (5) while Mr Johnson had to undertake some work that might ordinarily have been undertaken by a solicitor, that was work which in any event had to be undertaken. If a solicitor had been involved then there would have been an associated charge. Further, Mr Johnson's rate is likely to have been less than comparable solicitors' rates.

[18]

Evidence 23 Mr Prentice relied on three affidavits sworn by his solicitor, Nicholas Anthony James Dale, a partner at Gillis Delaney Lawyers, on 19 December 2016, 1 February 2017 and 29 March 2017 respectively. Mr Dale was admitted as a solicitor on 30 June 1994 and since that time has practised continuously in the area of commercial litigation in all courts, with a focus on construction, transport and insolvency litigation. 24 Mr Dale has not acted for Mr Prentice throughout the whole of this proceeding. He commenced acting for Mr Prentice in about May 2016. Prior to that, Sally Nash of O'Neill Partners incorporating Sally Nash & Co (O'Neill Partners) acted for him. As a result, Mr Prentice's claim for costs comprises the costs he incurred in retaining Ms Nash of O'Neill Partners from the commencement of the proceeding until on or about 18 May 2016 and the costs of retaining Mr Dale from on or about 18 May 2016. Initially, Mr Johnson was retained to act for Mr Prentice and from about 17 August 2016 Ms Castle was retained to act for Mr Prentice. 25 Mr Dale relevantly gives the following further evidence: (1) he provides copies of the fee disclosure and costs agreements of each of Mr Johnson and Ms Castle. He notes that initially Ms Castle appeared on behalf of both Mr Burke and Mr Prentice when Mr Johnson was unavailable to appear. For those attendances Ms Castle apportioned her fees equally between Mr Prentice and Mr Burke. Only those fees rendered to Mr Prentice are claimed in the application for a lump sum costs order; (2) he sets out the charge out rates he agreed to charge Mr Prentice in the proceeding for work done by him and other fee earners, which were discounted from usual rates; (3) he notes that GST has not been applied to the invoices rendered in this matter; (4) following communications that Mr Prentice had with his insurance broker and solicitors acting for his insurer, Antares Managing Agency Limited (Antares), Mr Dale was informed that Antares would indemnify Mr Prentice in relation to his costs of defending the proceeding. Antares required Gillis Delaney and counsel respectively to address their invoices to it for payment; (5) Antares agreed rates for Mr Dale's fees and Mr Johnson's and Ms Castle's fees. As Antares was based outside Australia no GST was payable; (6) the total amount of costs, comprising professional fees, disbursements and counsels' fees incurred from 4 November 2015 to 27 February 2017 is $186,412.59; (7) Mr Dale estimated that Mr Prentice will incur further costs, comprising Gillis Delaney Lawyer's fees and counsel's fees, of $13,100 to the conclusion of the hearing; and (8) thus, the total amount claimed by Mr Prentice is $199,512.59. 26 Mr Dale annexes to his affidavits counsels' fee disclosures and costs agreements, invoices rendered by his firm, invoices rendered by counsel and invoices for disbursements in support of the costs claimed by Mr Prentice.

[19]

Submissions 27 Mr Prentice relies on the general submissions set out at [19] to [21] above. In relation to quantum Mr Prentice makes the following further submissions concerning his claim: (1) given Mr Dale's experience and expertise, having been admitted as a solicitor in 1994 and having practised continually in the area of commercial litigation with a focus on, among other things, insolvency litigation, his hourly rate is reasonable; (2) the liability to pay the fees of O'Neill Partners is established by the appointment letter dated 27 October 2015 from that firm to Mr Prentice, which attaches a standard disclosure and cost agreement; (3) O'Neill Partners issued one invoice for work done by Ms Nash, partner, and other administrative staff. Mr Prentice submitted that the fees charged by the administrative staff were recoverable as reasonable on an indemnity basis, particularly by reference to the characterisation of the work done by them; (4) the liability to pay the fees of Gillis Delaney Lawyers is established by the letter dated 20 May 2016 from that firm to Mr Prentice, which encloses the "GD Master Retainer Terms". The rates included therein were subsequently reduced because of the involvement of Antares. It was submitted that the amounts agreed were reasonable and ought not be reduced; (5) in the case of both counsel, Mr Johnson and Ms Castle, the rates charged were within the range provided for by the Guide to Counsel Fees; (6) any arrangement Mr Prentice had with his insurer is of no relevance. The existence of the insurance policy and whether it responds to the claims made by the applicants is a contractual matter between Mr Prentice and his insurer and is not a matter which can relieve the applicants of liability to pay costs where it is shown, as it has been here, that Mr Prentice had a legal liability to pay those costs. That is, Mr Prentice had the primary liability to pay the costs he incurred in defending the proceeding; and (7) the most commonly used method of calculating quantum is to take a "broad brush" approach and apply a discount or, in the circumstances of an indemnity costs order, to apply no discount. A discount could also be separately applied to professional fees as opposed to disbursements and counsel's fees. But in the circumstances of this case the Court would consider carefully whether there was any reason to make a reduction. To give effect to the indemnity costs order the Court would allow all costs other than those which are unreasonable. Looking at the integers of the costs in this case, the hourly rates of the solicitors involved and the hourly and daily rates of counsel, there is nothing to lead the Court to the conclusion that any aspect of the costs claimed is unreasonable such that it would fall outside the indemnity costs order.

[21]

Evidence 28 The Official Trustee and the Inspector-General rely on two affidavits sworn 16 December 2016 and 28 February 2017 respectively by Bradley James Dean, a lawyer with the Australian Government Solicitor (AGS), who has had the conduct of the proceeding on their respective behalves. 29 Mr Dean notes that the Official Trustee and the Inspector-General are entitled to claim input tax credits in respect of any GST relevant to the claim for costs included in his affidavit; that the Official Trustee and the Inspector-General are not claiming more than either of them is liable to pay for costs and disbursements; that the information provided is a fair and accurate summary of the costs and disbursements that the Official Trustee and the Inspector-General are entitled to claim; and that those claims are capable of further verification through source material should such material be required by the Court. 30 Mr Dean provides: (1) a breakdown by number of hours worked on the matter by various AGS personnel and the blended hourly rate charged for the work performed between November 2015 and 30 June 2016 and since 1 July 2016; (2) a breakdown of the disbursements incurred on behalf of the Official Trustee and the Inspector-General, 95% of which comprise counsel's fees charged by Michael Heath; and (3) an estimate of party-and-party costs, calculated by applying a two-thirds reduction to the total fees charged by the AGS after deducting an amount that the Official Trustee cannot recover relating to her costs of an unsuccessful summary judgment application and those costs which the Inspector-General can claim on an indemnity basis relating to her application to set aside the subpoena. 31 The amount claimed for AGS's fees, counsel's fees and disbursements in the proceeding up to the application for lump sum costs by the Official Trustee is $61,809.27 excluding GST and by the Inspector-General is $19,579.02 excluding GST. The amount claimed by the Inspector-General comprises AGS fees on a party-and-party basis for the joinder application and all AGS fees incurred for the application to set aside the subpoena. In addition, the Official Trustee and Inspector-General claim their costs of their lump sum costs applications estimated at $5,167.98 exclusive of GST for solicitor and counsel fees, to be apportioned equally between them.

[23]

the applicants' submissions 34 The applicants did not rely on any evidence but relied on a document titled "Agreed Statement of Costs Recovery Proceedings" (Agreed Statement). That document sets out the status of costs orders made in various proceedings heard in this Court, the Supreme Court of New South Wales and the Federal Circuit Court of Australia in which the parties included one or more of the applicants to this proceeding, principally Mr Prentice but also Mr Burke and the Official Trustee. 35 Before addressing each of the particular applications for lump sum costs orders the applicants made submissions of general application. 36 First, they submitted that the Court must do justice between the parties and, insofar as the quantum of any order was concerned, take care not to "under discount" the amount of any claim. They submitted that this, in turn, meant that there needed to be an opportunity for all parties to fully address the claim. In particular, because the evidence of quantum comes from the party moving for the lump sum costs order, there needed to be an opportunity for the opposing party to investigate and, if necessary, challenge the evidence. 37 While the applicants accepted that they had not put on any evidence challenging the quantum of costs claimed by Messrs Burke and Prentice, the Official Trustee or the Inspector-General, they submitted that there needed to be sufficient evidence to satisfy the Court that the amount claimed was logical, fair and reasonable, as required by the Costs Practice Note, as opposed to arbitrary. They further submitted that the issue that arose with the claims made by each of the respondents was that there was a lack of evidence as to the reasonableness of the quantum of costs claimed and that some evidence of reasonableness was required to justify the exercise of the Court's discretion. 38 The applicants contended that there were three aspects to assessing reasonableness: the task itself; the rate that is claimed; and the time that is claimed. They contended that the Court would need to address each of those items separately. They also contended that there were two ways of providing the evidence required. The first was via an expert costs assessor and the second was via a solicitor providing evidence of his or her firm's usual recovery on a taxation or costs assessment on a party-and-party or indemnity basis. The applicant submitted that no evidence of this nature had been provided. 39 Secondly, the applicants submitted this was neither a huge case, where a court may wish to avoid the need for parties to become embroiled in a large taxation, nor a simple case, where an application for a lump sum costs order could be easily disposed of based on the quantum of costs claimed. It was a case in the middle, suitable for a taxation, where the risk and the potential for that process to be lengthy and expensive are less but also where the requirement for some evidence is more than one would need in a simple case. 40 Thirdly, the applicants submitted that the making of a lump sum costs order is not punitive. They submitted that to the extent that there is any issue about the conduct of the applicants then, at least in relation to Messrs Burke and Prentice, that is reflected in the Court ordering that the applicants pay their costs on an indemnity basis. The applicants submitted that when the cases speak of the parties' conduct they are referring to the issue of delay, particularly deliberate delay, and that this is not a case where there had been delay. 41 Fourthly, the applicants relied on the Agreed Statement. The applicants submitted that each of the parties to the proceedings included in the Agreed Statement had been and were entitled to a full costs assessment and a full investigation of the costs claimed in those proceedings with a detailed bill of costs. They submitted that that was a factor which the Court should consider in determining whether this proceeding should be treated any differently. 42 Included in the Agreed Statement at [18]-[19] is proceeding NSD 25 of 2016. An order was made in that proceeding that Mr Prentice pay 70% of the costs of Fewin and Ronald Coshott of that proceeding, but no bill has yet been lodged by Fewin and Ronald Coshott for taxation. The applicants submitted, by reference to that order, that to make a lump sum costs order in favour of Mr Prentice in this proceeding would be to give Mr Prentice a priority in terms of the date of a judgment, while Fewin and Mr Coshott will have to await the outcome of a full taxation before having the benefit of a judgment in their favour. 43 The applicants made additional submissions in relation to each of the individual applications. 44 In relation to Mr Burke's application they submitted that it did not follow that because all of the work was done by Mr Johnson and there was no solicitor involved the costs were lower. The applicants submitted that, for instance, as an alternative, Mr Burke could have retained a solicitor for discrete tasks so that procedural aspects of the matter could have been carried out more efficiently, which would have resulted in a cost saving. 45 In relation to Mr Prentice's application the applicants noted that his costs had been paid by an insurer. They submitted that relevant factors for the Court to take into account included where a party is suffering some hardship because it is deprived of its costs for the period of the costs assessment and where there is an impecunious party against whom the order is going to be made. They further submitted that, where there is a limited-means applicant and a respondent who is never going to be able to pay, one can immediately see the force in applying for a lump sum costs order. The applicants submitted that that is not the case for Mr Prentice, who is not being kept out of his money because his costs have been paid by an insurer. They contended that there is no evidence to suggest that the applicants will be unable to pay the amount of any costs order. 46 In relation to the Official Trustee the applicants submitted that there was no judicial determination of the proceeding as between them and the Official Trustee. They submitted that the orders made on 12 December 2016 were by consent, constituting an agreement between the parties to resolve the proceeding on the terms reflected in the orders. That being so, the applicants submitted that the grounds on which the Court can set aside or vary the orders are limited as set out in r 39.05 of the Rules. Initially, the applicants submitted that the circumstances in which the orders were made gave rise to two issues: first, because the orders finally resolved the proceeding as between the applicants and the Official Trustee, there would need to be a variation of them to allow for a lump sum costs order; and, secondly, as the costs were ordered to be paid as "agreed or taxed", the lump sum costs order sought by the Official Trustee was directly contradictory to that order. They submitted that the lump sum costs order sought was not a supplemental order or an order of a mechanical nature required to give effect to the order that was made. However, the applicants withdrew their reliance on the second issue in light of the judgments in Short v Crawley (No 45) [2013] NSWSC 1541 (Short v Crawley) (per White J) and Hudson v Sigalla [2016] FCA 1204 (Hudson) (per Katzmann J). 47 In relation to the claim by the Inspector-General the applicants submitted that costs orders in her favour had been made in May 2016 and that there had been a significant delay before an application was made for a lump sum costs order in December 2016. The applicants also submitted that an issue of overlap arose as between the costs claimed by the Official Trustee and the Inspector-General. The applicants contended that there was a further complication insofar as the Inspector-General had the benefit of two costs orders, with one order being made on a party-and-party basis and the other on an indemnity basis, and that where orders are made on two different bases then the issue of accurate costs apportionment between the various applications is more important.

[24]

Should orders for lump sum costs be made? 48 In my opinion it is appropriate that lump sum costs orders be made. My reasons for reaching this conclusion follow. 49 I will address the issues of general principle first. As was observed in Clipsal Australia at [9] the circumstances in which an order for lump sum costs may be made are not closed. The power to make such an order can be exercised whenever the circumstances warrant it. The making of such an order is not limited to large or complex cases, nor to simple cases. Relevantly, the circumstances in which such an order can be made include the avoidance of the delay, expense, inconvenience and aggravation arising out of a taxation. The purpose of making such an order is not punitive. Rather, it is made in order to bring finality to the litigation in a way that is efficient for the parties both in terms of the time and cost they might otherwise expend in the taxation process. The need to finalise the proceeding in that way may be viewed in the context of the proceeding as a whole. 50 The applicants commenced this proceeding in October 2015 seeking relief on one basis, but then abandoned those claims, repleading their case at a time when the respondents had already been put to the trouble of preparing for a hearing. Leading up to the hearing there were a number of aspects of the way in which the applicants conducted the proceeding which caused the respondents to unnecessarily expend time and resources, including serving voluminous material but failing to specify what parts of that material would be relied on against each respondent at trial; failing to comply with aspects of the Court's orders; and late service of material to be relied on at the hearing. Ultimately, the amended claim was abandoned at the rescheduled hearing. 51 The respondents have been put to the trouble, time and expense of preparing for a hearing on two occasions only to find, on both occasions, that the claims were, or were effectively, abandoned. They ought not now be subjected to the inconvenience of a potentially protracted taxation process when the issue of costs can be dealt with on a final basis in an efficient manner. This is particularly so in circumstances where one of the respondents, Mr Prentice, is the trustee of Robert Coshott's estate. The administration of that estate ought not be delayed. 52 The fact that some or all of the applicants may have the benefit of costs orders made in their favour in other proceedings against the respondents is not relevant to a determination of whether a lump sum costs order should be made in this proceeding. Those other proceedings were each separate, and while they may have some commonality of parties, they do not have commonality of issues and were not heard together. The quantification of a costs order made in a party's favour in a particular proceeding should be determined by whatever process is most appropriate. The fact that Mr Prentice may get a "priority" because his application for a lump sum costs order is determined prior to any application on the part of the applicants to quantify an order in their favour against Mr Prentice in an unrelated proceeding is of no relevance. 53 In each case the applicants for lump sum costs have provided evidence, in the case of the Official Trustee, Mr Prentice and the Inspector-General, through their solicitors, and in the case of Mr Burke, through counsel acting on a direct access basis, of the applicable rates for the solicitors and counsel acting, the tasks undertaken and the time claimed. In the case of the Official Trustee there is evidence of the likely recovery on a party-and-party basis. Messrs Burke and Prentice and, in part, the Inspector-General, have the benefit of indemnity costs orders. They submitted that the Court would give effect to those orders by allowing all costs other than those which are unreasonable. They have not provided evidence of the likely recovery on a taxation or assessment where an indemnity costs order has been made. Rather, they each submitted that, given the reasonableness of the costs, they would be entitled to recover all of them. Against this, the applicants submitted that some evidence of reasonableness of the costs claimed was required to justify the exercise of the Court's discretion. The applicants could have challenged the reasonableness of the costs claimed by leading appropriate evidence. They have chosen not to do so (see [61]-[63] below). In the circumstances, I would not decline to exercise my discretion on that basis. 54 Turning then to the specific issues raised by the applicants against the making of an order. 55 Mr Prentice's costs are being paid by his insurer, Antares. The applicants suggested that this Court would not exercise its discretion to order costs in a lump sum because Mr Prentice is not being kept out of his money. In the circumstances of this case that is not a basis upon which I would decline to exercise my discretion in favour of making an order for lump sum costs. The insurer is a commercial party which, like any other party, is entitled to its money. While it may be the case that Mr Prentice is not being kept out of his money, that is not so for his insurer. 56 The orders made to conclude the proceeding as between the applicants and the Official Trustee included an order made by consent that the applicants pay the Official Trustee's costs as agreed or taxed. That order has been entered. There is no issue between the parties that a lump sum costs order is in the nature of a supplemental order that can be made in aid of and as an alternative mode of enforcing a costs order made earlier in a proceeding and that the Court has the power to make such an order: see Short v Crawley at [27]-[33] and Hudson at [51]-[58]. 57 The applicants contended that the terms in relation to the payment of costs as between them and the Official Trustee "represented a settled agreement between the parties". The applicants did not say whether there is an express or implied term of any agreement to the effect that the Official Trustee "is not entitled to bring a fresh application in respect of the payment of those costs" and, if so, how that term arises. The applicants submitted that the orders, including the costs order, were made by consent to resolve the proceeding and that the Official Trustee was not entitled to come back and, in effect, ask for more. But the Official Trustee is not asking for more. The application for a lump sum costs order is an application by which the Official Trustee's costs the subject of the order previously made may be quantified. As the Court has recognised, an application for lump sum costs is simply a different method of implementing an earlier order for costs. In my opinion, despite the order being made by consent, there is nothing in its terms that prevents the application now being made. 58 The applicants complained that the Inspector-General has delayed in bringing her application for a lump sum costs order based on orders made in her favour in May 2016. There is no requirement as to when an application for a lump sum costs order should or can be made: see Hudson at [51]-[55]. In any event, the proceeding in which the costs orders in favour of the Inspector-General were made was concluded in December 2016. Although she was not a party to the proceeding, she was represented by the same solicitors and counsel as the Official Trustee. I would infer that, as a result, she was made aware of relevant procedural developments in the proceeding. It is thus not surprising that immediately following the disposal of the proceeding the Inspector-General made her application for a lump sum costs order.

[25]

Quantum of the orders for lump sum costs 59 The applicants submitted that care had to be taken not to "under discount" the amount of any claim made. They also submitted that the party against whom the order was to be made needed to be given an opportunity to investigate and, if necessary, challenge the evidence. I accept that submission. Indeed, the Costs Practice Note, which sets out the procedure to be adopted by the parties where an application for a lump sum costs order is made, makes provision for a costs respondent to file an affidavit responding to the material relied on by an applicant for a lump sum costs order in accordance with the timetable set by the judge. Orders were made by the Court for the applicants to file any evidence on which they wished to rely in relation to the applications for lump sum costs orders. Despite the orders made by the Court and the procedure described in the Costs Practice Note, the applicants have not put on any evidence challenging the quantum of costs claimed by any of the parties. The evidence of quantum relied on by Messrs Burke and Prentice, the Official Trustee and the Inspector-General is unchallenged. 60 I address the question of quantum of each of the claims below. However, I note that in doing so I am not required to undertake a line by line analysis of the costs claimed. To do so would be contrary to the rationale behind the lump sum costs order process. As Foster J observed in Bayley & Associates Pty Ltd v DBR Australia Pty Ltd [2014] FCA 346 at [17(e)], a broad brush approach should be taken by the Court in deciding whether to make a lump sum costs order and in arriving at the quantum thereof. The task is one of estimation or assessment and not of arithmetic. 61 In assessing quantum the Court is entitled to take into account the evidence that is before it; its own observations of the proceeding and the judge's own experience: see Bobb v Wombat Securities Pty Ltd (No 2) [2013] NSWSC 863 at [10] (per Beech-Jones J). Hancock v Rinehart (Lump sum costs) [2015] NSWSC 1640 concerned an application by the plaintiffs for a lump sum costs order in respect of an order for indemnity costs. The only matter for the court to determine was quantum; the parties did not dispute that the case was an appropriate one for a lump sum costs order. One of the issues to be considered was whether there should be a "further overall global reduction" on account of "the lump sum nature of the assessment". The court had before it evidence from a costs consultant and evidence from the plaintiffs' solicitor as to what he would expect the plaintiffs to recover on an assessment on an indemnity basis. At [57]-[58] Brereton J said the following about the issue of whether a discount should be applied: 57 While it is undoubtedly the usual practice of the court when making a lump sum costs order to apply a discount for the reasons mentioned, that does not mean that the Court must apply a percentage discount to the sum sought by the successful party, and the Court "must be astute not to cause an injustice to the successful party" by applying "an arbitrary 'fail safe' discount on the costs estimate submitted to the court". Thus if the court can be confident that there is little risk that the sum includes costs that might be disallowed on assessment, the case for a discount is seriously undermined. 58 Where a gross sum is assessed on an indemnity basis, and there is no evidence of unreasonableness, it may be inappropriate to apply any discount, although one may nevertheless be appropriate if there is evidence that the successful party "errs on the side of excessiveness [as in excessive use of legal services]". (footnotes omitted) 62 At [61] Brereton J relevantly said: Because this is an indemnity order, the first defendant bears the onus of proving unreasonableness, and any doubt about the reasonableness of the amount charged for a particular item is to be resolved in favour of the plaintiffs. Notwithstanding the availability of a detailed itemised bill, the first defendant has not identified any element of unreasonableness: there is no suggestion by the first defendant that the plaintiffs have been excessive in their use of legal services, or that the rates charged by the solicitors and barristers retained by the plaintiffs were excessive, or that it was unreasonable for the plaintiffs to have retained any of those advisors. That no assertion of unreasonableness has been made, where the first defendant bears the onus, is significant. It is also unsurprising - given that, in the context of this litigation and the resources with which the plaintiffs were confronted, they have adopted a relatively economical approach to the litigation. (footnotes omitted) 63 Here too the applicants have had the benefit of evidence which sets out the hourly rates, tasks undertaken and time spent on particular items of work. Despite that, they have not filed any evidence which challenges the reasonableness of the charges in each case, be it in relation to the hourly rates or daily rates for counsel; the items of work undertaken; or the time spent on items of work. Their objections have gone no further than assertions, made by way of submission, which are insufficient to discharge the onus of proof which they bear if they wish to prove that any of the charges are unreasonable.

[26]

Mr Burke 64 Mr Burke seeks a lump sum of $84,280.21 inclusive of GST for his actual costs and disbursements incurred of $82,630.21 and an estimate of future costs related to this application. The estimate of future costs is for $2,750 inclusive of GST. There is evidence before me that Mr Burke is liable to pay those costs, which are made up of fees for work performed by Mr Johnson and one disbursement, being a filing fee for an application to set aside two subpoenas issued at the request of the applicants. 65 In my opinion the amount claimed is reasonable. Mr Johnson was, with minor exceptions, the only person who undertook the work on behalf of Mr Burke. The rates charged by him were within the Guide to Counsel Fees for junior counsel, particularly having regard to Mr Johnson's years of experience. There is no evidence that any of the work undertaken or the time spent on that work was unreasonable. On my own review of the tax invoice dated 15 December 2016, which sets out the bulk of the costs incurred, the amount claimed appears to be reasonable. The submission that the charges may have been less if a solicitor was retained to carry out some of the tasks is rejected. There is no evidence that that would be the case. Mr Burke has the benefit of an indemnity costs order and in my opinion is entitled to recover the whole of the amount claimed for work done in relation to the proceeding and associated disbursements. 66 The costs claimed for work done relating to this application are in a different category. They arose after the indemnity costs order was made on 13 December 2016. While there is no doubt that Mr Burke is entitled to his costs of this application, those costs should be allowed on the ordinary basis. Mr Burke has estimated those costs at $2,750 but has only included a portion of that estimate, $1,650, in the total claimed amount of $84,280.21. That reflects an appropriate discount on those costs given the view I have taken of the basis on which they should be quantified. Therefore, I will fix Mr Burke's costs in the sum of $84,280.21 inclusive of GST.

[27]

Mr Prentice 67 Mr Prentice seeks a lump sum of $199,512.59 exclusive of GST. That sum comprises the actual costs incurred by Mr Prentice from 4 November 2015 to 27 February 2017 and an estimate of future costs relating to the application for lump sum costs. Mr Prentice makes no claim for GST. 68 Mr Prentice is indemnified by Antares. But Mr Prentice is primarily liable for payment of the costs, as can be seen from the solicitors' terms of engagement and counsels' fee disclosures and costs agreements which are in evidence before me: see eInduct Systems Pty Ltd v 3D Safety Services Pty Ltd (2015) 90 NSWLR 451 at [25]. 69 Mr Prentice has the benefit of an indemnity costs order. There is evidence before me of the rates charged by the various solicitors and counsel retained to act in the proceeding for Mr Prentice and detailed accounts showing the work undertaken and the time spent. In my opinion the rates charged are reasonable and, insofar as counsel are concerned, their rates are within the Guide to Counsel Fees for junior counsel, particularly having regard to their respective years' of experience. The applicants have not led any evidence to challenge the reasonableness of the rates charged, work undertaken or time spent on particular items of work. The applicants made some submissions to the effect that the costs may not have been reasonably incurred, pointing to certain items, but those submissions were made without any evidence to support them and carry very little, if any, weight. 70 I have reviewed the material in support of the amount claimed. Based on my review the amount claimed is, in my opinion, subject to the following matter, reasonable. Mr Prentice's claim includes an amount of $28,624.48 for the costs, both actual and estimated, of this application. That amount is made up of all work carried out since 14 December 2016 and arose after the indemnity costs order was made on 13 December 2016. As is the case with Mr Burke, while Mr Prentice is entitled to his costs of this application, they should be allowed on the ordinary basis. In order to reflect that I will apply a discount of approximately one-third to that portion of the costs claimed, reducing them to $19,000. Therefore, I will fix Mr Prentice's costs in the sum of $189,888.

[28]

The Official Trustee 71 The Official Trustee seeks a lump sum of $64,393.26 exclusive of GST for her costs of the proceeding, including her costs of this application. 72 There is evidence before me of the hourly rate charged for work done by solicitors on the matter and the number of hours worked by each solicitor, with the bulk of the work having been undertaken Mr Dean. There is also evidence that the amount being claimed is not more than the amount the Official Trustee is liable to pay for costs and disbursements. The information provided is in accordance with the requirements of paragraph 4.10 and annexure A of the Costs Practice Note. The claim is comprised of solicitor costs and disbursements, the latter principally comprising counsel's fees and, in addition, fees for transcripts, Court filing, photocopying and couriers. The Official Trustee is entitled to her costs on a party-and-party basis. 73 Mr Dean has undertaken an exercise to isolate those costs referrable to acting for the Official Trustee from those referrable to acting for the Inspector-General. He has deducted those costs referrable to the Official Trustee's unsuccessful application for summary judgment and has applied a discount to arrive at a figure for solicitor costs recoverable on a party-and-party basis. Counsel's fees and disbursements have not been discounted. Counsel's rates are well within the Guide to Counsel Fees and other disbursements are a small proportion of the total claimed. 74 There is no evidence that any of the work undertaken for the Official Trustee was unreasonable. I am satisfied that there is no overlap between the amounts claimed for the Official Trustee and the amounts claimed for the work done for the Inspector-General despite the commonality of solicitors and counsel acting. 75 Subject to one matter, in my opinion, the amount claimed by the Official Trustee is reasonable. That matter concerns the costs of this application. Those costs should be reduced because the Official Trustee is only entitled to her costs of this application on a party-and-party basis. Mr Dean has applied a reduction to the amount claimed by the Official Trustee for solicitor costs incurred in connection with the proceeding. I will also apply a reduction to the solicitor costs component of work performed in connection with this application. The reduction I will apply is approximately one-third, in line with the reduction applied to that component of costs claimed by Mr Prentice. That is a reasonable reflection of the party-and-party solicitor costs given the work undertaken and the hourly rate charged. Thus, the amount allowed for the costs of this application is $2,056. I will fix the Official Trustee's costs in the amount of $63,865.

Fewin Pty Ltd v Burke

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