GMZ18 v Minister for Immigration, Citizenship and Multicultural Affairs

(a) The overriding principle in relation to the assessment of costs is that costs should be set to provide the successful party with a fair, not a full, indemnity for the costs he or she has incurred in having to litigate.

(b) The scale of costs provided for by Schedule 2 to the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (GFL Rules) provides a benchmark against which the reasonableness of a party's costs are to be assessed, including for the purposes of making a lump sum costs order.

(c) The effect of the order for costs made on 17 April 2024 was to entitle the applicant to have his costs assessed and paid in accordance with r 22.09 and Div 1 of Part 2 of Schedule 2. The amount Schedule 2 prescribes for a migration proceeding that concludes at hearing is $8,371.30.

(d) It would not be appropriate to make a lump sum order for costs because the applicant has supplied insufficient information from which such assessment could reasonably be made; and, for that reason, the assessment of costs should be referred for taxation pursuant to Part 40 of the Federal Court Rules 2011 (Cth) (Federal Court Rules).

(e) If the applicant's costs are to be assessed on a lump sum basis, the principal question that is to be addressed is whether I am in a position to assess for myself the amount that would represent a fair indemnity for the applicant's costs. Factors relevant to the determination of that question include the nature of the proceeding, the number and complexity of grounds, the number of interlocutory proceedings and hearing duration; the usual steps involved in a migration matter; the retention of counsel; the length and quality of written submissions, evidence, and the court book; and evidence about what proportion would be allowed on taxation.

(f) There is no feature of this case that would support an award of indemnity costs; and, for that reason, the applicant's costs should be assessed on a party and party basis.

(g) If the applicant's costs are to be assessed on a party and party basis, that should be done by taking the applicant's actual costs, and applying a discount to those costs, with the amount of the discount to be determined by reference to the amount that would be recoverable on a taxation, and whether the actual costs appear to be disproportionate to the nature of the proceeding.

(h) The Court does not have power to award interest on a lump sum costs order before making such an order.

Method by which costs are assessed are within the discretion of the Court

1. In CIQ17 v Minister for Immigration, Citizenship, Migration Services and Multicultural Affairs (No 2)[7] I identified the provisions in the Federal Circuit Court of Australia Act 1999 (Cth) and in the Federal Circuit Court Rules 2001 (Cth) relating to the power of this Court to award costs in general, and the ways in which the Court may order that costs be assessed. Those provisions have been substantially reproduced in the FCFC Act and the GFL Rules; and the principles I identified in CIQ17, therefore, apply to those provisions. The principles are as follows:

(a) Having made an order for costs, this Court may make no order for the assessment of costs, in which case costs will be liable to be assessed under Schedule 2 to the GFL Rules.

(b) The Court, however, has power to order that costs be assessed by a means other than pursuant to Schedule 2 to the GFL Rules. In particular, the Court has power to deal with the assessment of costs it has ordered a successful party (costs beneficiary) to pay by any one of the means provided for by r 22.02 of the GFL Rules: the Court may "set the amount of the costs"; set "the method by which the costs are to be calculated"; or refer the costs for taxation under Part 40 of the Federal Court Rules.

(c) It is within the discretion of the Court to determine which of the powers for the assessment of costs it will exercise in any given case; and that discretion is to be exercised having regard to the principles that have been applied in the assessment of costs. The overriding principle is that costs should be set to provide the costs beneficiary a fair indemnity for the costs he or she has incurred in having had to litigate, and succeed in that litigation.[8]

(d) When faced with an application for an order that the Court set the amount of a cost beneficiary's costs, or an order to determine the method by which such costs are to be assessed, the principal question is whether the Judge is in a position to assess the amount that would represent a fair indemnity for the costs the costs beneficiary has incurred in succeeding in the proceeding.

1. Given its importance, it would be appropriate at this point to explore briefly the notion of "fair indemnity". It points to two broad things. The first is the scope of the activities in relation to which the costs beneficiary has incurred costs, and for the incurring or payment of which he or she seeks to be indemnified. The activities must bear a reasonable relation to the orders the costs beneficiary secured in his or her favour; that is, the activities must bear a reasonable relationship with the victory in the proceeding the costs beneficiary achieved. Whether those activities are reasonably related to the orders the costs beneficiary obtained is to be assessed objectively, by positing in some way the scope of work competent lawyers would reasonably have undertaken to secure the order the costs beneficiary obtained, and the time within which such work would reasonably be performed.
2. The second thing to which the notion of "fair indemnity" points is the valuation of the work competent lawyers would reasonably have undertaken to perform the work, and the valuation of disbursements they or the costs beneficiary had to incur to secure the order the costs beneficiary obtained. The value must be reasonable; and reasonableness is to be assessed by reference to some external standard, such as values set by rules of court, or values that could be said to reflect market or going rates, or by some other means.

1. In addition to the power to award costs, courts have had the power to determine or otherwise supervise the assessment of costs that represents a fair indemnity of the costs a costs beneficiary has incurred. This has traditionally occurred through a process known as "taxation of costs". Part 40 of the Federal Court Rules is a modern example, but it is a significantly modified procedure to the traditional method, largely because, as will appear, the substantial basis of assessment depends on the time spent on undertaking activities associated with the proceeding, rather than valuing specific items of work irrespective of the time taken to perform the work.
2. The procedure of taxation of costs provided for under Part 40 of the Federal Court Rules seeks to ensure that a costs beneficiary recovers no more than a fair indemnity of the costs he or she has incurred in two broad ways. The first, and most obvious way, is to identify particular activities that occur in the provision of legal services, and assign values to, or the means for valuing, those activities. These activities, and their values or means of valuation, are specified in Schedule 3 to the Federal Court Rules. The most general activity is covered by item 1.1 of Schedule 3, which is attendances by a skilled lawyer. The value is calculated by assigning a maximum rate of $75 for every unit of six minutes. Schedule 3 uses the rate for attendance to value other activities it identifies, such as reading and preparing documents, supervising the work of others, and researching "a legal question of some complexity". These items, however, do not apply to the work of barristers. The valuation of the work performed by barristers is dealt with by item 16.1 of Schedule 3. That item provides that an amount may be allowed for counsel's fees according to the circumstances of the case, but that the amount may be assessed by reference to the "National Guidance to Counsel Fees". That is a guide that is made available on the Federal Court's web page.[9] It provides a range of amounts by reference to applications and appeals, appearances at hearings, interlocutory applications, and hours of work.
3. A second way in which taxation seeks to ensure that a costs beneficiary recovers no more than a fair indemnity of the costs he or she has incurred is by specifying criteria that identifies the range of work for which a costs beneficiary may be indemnified. The most common criterion is that which is denoted by the expression "party and party costs". In W & A Gilbey Ltd v Continental Liqueurs Pty Ltd Asprey J defined "party and party costs" to mean costs:[10]

incurred on behalf of the litigant by his solicitor in respect of some step or matter in the litigation which either (1) was necessarily taken or performed for the attainment of justice or the maintaining or defending of the litigant's rights in the circumstances of the particular case, or, (2) although not necessarily taken or performed for such purposes, would reasonably have been taken or performed for any of those purposes by a solicitor acting at the time when it was taken or performed without extravagance in conformity with the then situation of the case and not in conflict with the statutes and rules, the practice of the Court and the usages of the legal profession appertaining to such a case.

1. It would be useful to set out Asprey J's observation about the approach that should be taken in determining whether any particular item of costs is necessary or proper, observations that are as relevant to modern legal practice as they were at the time his Honour made them:[11]

In determining whether an item of costs is "necessary" or "proper", the taxing officer would have regard to the facts in issue between the parties' litigation as disclosed by the pleadings and to all facts which render probable the existence or non-existence of the facts in issue including those matters which would affect the weight or credibility of any such facts. But, in making his decisions upon these matters, the taxing officer should place himself [or herself] in the position of the solicitor sitting in his [or her] office chair engaged in the task of preparing the case for trial and, to use the words of Sachs J in Francis v Francis and Dickerson at 96: "...in particular, care must be taken not to be affected by what is colloquially termed 'hindsight'." The question of the necessity for or propriety of any item of costs should be judged by the state of things known or which ought reasonably to have been known to a diligent solicitor at the time when the expenditure was made, or the liability therefore was incurred.

1. Rule 40.01 of the Federal Court Rules provides that if an order is made that a party or person pay costs or be paid costs, without any further description of the costs, the costs are to be costs as between party and party. This rule is reinforced by specific provisions that identify costs that may not be assessed as costs. These are identified in r 40.30, which include costs which, in the opinion of the taxation officer, have been incurred or increased through overcaution.

1. The purpose of the power to assess costs on a lump sum basis, rather than by taxation, "is to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation".[12] That does not mean that the object of assessing costs by means of a lump sum costs order is different from the object of ascertaining costs by means of taxation, namely, to ascertain an amount that represents a fair indemnity for the costs a costs beneficiary has incurred in succeeding in the proceeding. Assessment on a lump sum basis is a different means by which it is open to a court to assess what that amount is.
2. The assessment of costs in a lump sum has been characterised as applying a "broad brush" approach.[13] But an assessment on that basis cannot be made without regard to considerations of the sort a taxing officer would be required to take into account when assessing costs on a party and party basis; and, moreover, such assessment can only be made if there is sufficient material on the basis of which the court may make a more or less reliable estimation of what the outcome of a costs assessment might be. Barrett J (as his Honour then was) made observations to that effect in Tim Barr Pty Ltd& Anor v Narui Gold Coast Pty Ltd:[14]

Although the court, upon an application of this kind, does not attempt to emulate a costs assessor or taxing master and applies "a broader brush" than would be applied on assessment, it must be confident that the material before it enables it to make a sufficiently reliable calculation or estimate of an appropriate costs sum. And a decision as to what is an appropriate sum will depend to a large extent on reaching some kind of view of what the outcome on assessment might be.

1. Ball J made similar observations in Baychek v Baychek:[15]

Normally, s 98(4)(c) of the CPA is treated as a provision for the benefit of the costs applicant. It permits a costs applicant to make an application for a gross sum costs order rather than being put to the expense and trouble of an assessment. Courts have made it clear that, when used in that way, the court is not required to proceed as if it were dealing with an assessment. It is entitled to take a broad brush approach provided that that approach is logical, fair and reasonable: Beach Petroleum NL v Johnson (No. 2) (1995) 57 FCR 119 at 123; Hadid v Lenfest Communications Inc {2000] FCA 628 at [27]. Implicit in this principle is that the gross sum bear a reasonable relationship to the actual costs of the party making the application, and to the costs that that party might reasonably be expected to recover on assessment. That means, among other things, that there must be a reasonable evidentiary basis for the order the court makes. That evidentiary basis is normally provided by the costs applicant in the form of an affidavit setting out the actual costs incurred and how they were calculated. Often, the evidence also includes evidence of the amount that is likely to be recovered on assessment.

1. Both the applicant and the Minister relied on the judgment of Jackson J in Frigger v Trenfield (No 12) as describing the approach that should be taken when assessing costs on a lump sum basis:[16]

In a lump sum assessment, the court applies a broader brush than would be undertaken on taxation by reference to individual items of costs: Sandalwood Properties Ltd (Subject to a Deed of Company Arrangement) v Huntley Management Ltd (No 2) [2019] FCA 647 at [10] (Colvin J). The task is one of estimation or assessment and not of arithmetic: Bayley & Associates Pty Ltd v DBR Australia Pty Ltd [2014] FCA 346 at [17(e)] (Foster J). It is not a detailed examination of the kind that would be appropriate to taxation, as that would defeat the purpose of a lump sum costs order of avoiding the expense, delay and aggravation involved in a formal taxation of costs and associated litigation: Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 120 (von Doussa J); Bitek Pty Ltd v IConnect Pty Ltd [2012] FCA 506 at [14], [23] (Kenny J).

The approach taken must be logical, fair and reasonable: Beach Petroleum at 123; Harrison v Schipp [2002] NSWCA 213; (2002) 54 NSWLR 738 at [22] (Giles JA). The sum fixed should be proportionate to the nature and complexity of the case: Bitek at [18]. The Court's guidelines are a relevant benchmark and regard should also be paid to the scale of costs in Schedule 3 of the Federal Court Rules and the National Guide to Counsel Fees: Zafra Legal Pty Ltd v Harris (Liquidator) (No 3) [2021] FCA 441 at [121] (Banks‑Smith J). Dividing the costs claimed into relevant categories can enable the court to check the quantum for particular kinds of work against amounts generally claimed under lump sum assessments and to apply principles of proportionality in a logical way: Sandalwood Properties at [14]. As well as the evidence before it, the court is entitled to take into account its own observations of the proceeding and the judge's own experience: Fewin Pty Ltd v Burke (No 3) [2017] FCA 693 at [61] (Markovic J).

1. I do not accept the applicant's submission that his costs should be assessed on an indemnity basis; and that is because the Minister did not fail to comply with the order for costs I made on 17 April 2024. An order in the form of the order for costs I made is not self-executing. It is up to the costs beneficiary to take the necessary steps to have his or her costs assessed. The applicant took that step only on 11 March 2025, when Ms Battisson requested a case management hearing.[17]
2. Ms Battisson's having provided the Invoice did not constitute the applicant's taking a step to have his costs assessed; and the Minister's not responding to that email by itself does not merit any criticism, given that the Minister had filed an appeal against the orders I made, including the order for costs, and Ms Battisson herself not taking any further steps in relation to the assessment of the applicant's costs until after Ms Warner Knight informed Ms Battisson that the Minister had discontinued the appeal.

1. I accept the Minister's submission that the material on which the applicant relies lacks detail of the work for the charging of which he seeks an indemnity. The deficiency relates to the generality with which the work is described in the Attachment, SCI, and JCI. It is not possible to identify from those documents the issue or issues in relation to which the work the documents describe was performed; and, for that reason, it is not possible to assess whether the work was reasonably necessary or proper. The nature of the proceeding, however, affords a basis from which the applicant's costs may rationally and fairly be assessed on a lump sum basis; and there are two relevant aspects of the proceeding that make this possible.
2. First, the proceeding related to the determination of a distinct question; and that was whether the principles the High Court identified and applied in NZYQ v Minister for Immigration, Citizenship and Multicultural Affairs[18] applied to the applicant, such as to require this Court to order his release from immigration detention. That question was to be determined having regard to the Minister's Department's assessment that Australia could not return the applicant to Iran without Australia breaching its non-refoulement obligations, and there being no evidence to suggest there was a country other than Iran to which the applicant could be returned. A potential complication in the determination of that question arose on 10 April 2024 when the Minister made a decision under s 48B of the Migration Act 1958 (Cth) that s 48A of that Act not apply to the applicant, and unsuccessfully applied for an adjournment of the proceeding on the basis of that decision. But that did not distract the parties from the central question, which was whether NZYQ applied to the applicant's circumstances such as to require this Court to order his release from immigration detention.
3. Second, there is the procedural simplicity by which the central question could be and was presented to the Court for argument and determination. The initiating document was short and simple, befitting the distinct issue that was the subject of the proceeding; the evidentiary material consisted of affidavits annexing or exhibiting documents relating to the applicant's migration and other history, and internal Departmental assessments of the applicant and his circumstances; there was no dispute of fact; and there was one directions hearing, and a day for the hearing. That means that the legal work it was reasonably necessary and proper to perform in relation to the determination of the issue in the proceeding would have principally included the collecting and putting together of documents held by the Minister; refreshing an understanding of NZYQ, it being reasonable to assume that a lawyer practising in the field of migration would have had a good understanding of NZYQ in any event; reading the documents; formulating submissions that linked the principles of NZYQ to the circumstances of the applicant, as revealed by the documents, as would support the conclusion that the applicant was entitled to be released from immigration detention; filing and serving documents; and advocating the applicant's case at the hearing.
4. How many lawyers, and lawyers of what particular experience or qualifications, would it be reasonable to expect would have competently performed the work in the circumstances in which the applicant's lawyers performed that work; and over how many hours? It certainly did not reasonably require three lawyers devoting an aggregate of 172 hours of work to the matter, which is the aggregate of the hours the Annexure represents three lawyers performed in relation to the matter. That is manifestly disproportionate to the time within which it was reasonably necessary or proper to perform the work that was required for the applicant to succeed in the proceeding.
5. I am not satisfied that the nature of the proceeding required senior counsel. If it did, I am satisfied senior counsel did not require the assistance of junior counsel, notwithstanding the convention of senior counsel appearing with a junior counsel. I am satisfied that the nature of the proceeding warranted either one senior junior barrister, or one senior counsel, in either case, one who would be experienced in the field of migration law, and, because of that experience, would have been familiar with NZYQ. Further, I am satisfied that the work it was reasonably necessary to perform would also require one senior solicitor, and an administrative assistant. Given the retention of counsel, the senior solicitor's role ought reasonably to have been limited to performing the duties associated with a solicitor who is on the record.[19] That would involve the solicitor ensuring that he or she is conducting the proceeding on behalf of the applicant in accordance with the applicant's instructions, consistently with the senior solicitor's duties to the Court, and instructing counsel.
6. I am also satisfied that the work it would have been reasonably necessary or proper for a competent barrister to perform on behalf of the applicant in this matter would not warrant its being valued at $1,100 per hour or $11,000 per day. These rates are substantially beyond the maximum hourly and daily rate provided for by the National Guidance to Counsel Fees ($740 and $6,400 respectively); and there would be nothing that would lead me to conclude that a higher rate than these would be reasonable in the circumstances of this case. It is reasonable to expect that by the time the applicant commenced this proceeding barristers with experience in migration law would have been well aware of NZYQ, and barristers who had a charge out rate of $6,400 or less would have been able to competently perform the work that was reasonably necessary or proper to perform.
7. In my opinion, on a generous assessment, the work I have found it was reasonably necessary or proper to carry out could reasonably and competently have been performed by a barrister (either a senior junior barrister, or a senior counsel) working 5 full days (including the hearing and the directions hearing) at a daily rate of $6,400, supported by twenty hours of work performed by a solicitor at the rate of $750 per hour, being the maximum hourly rate provided for by Schedule 3 to the Federal Court Rules. (Allowing for the maximum rate of $750 per hour would cover work that would not require the skill or a senior solicitor.) On that basis, I would assess the applicant's costs at $47,000[20] which, together with GST, is $51,700.[21]

1. Subrule 22.07(1) of the GFL Rules provides that, "[u]nless the Court otherwise orders, interest is payable on outstanding costs at the rate applying under subrule (2) ". Thus, interest is payable on "outstanding costs". Given that the making of an order that a party pay another party's costs does not, by itself, give rise to pay any liquidated amount, but confers an entitlement on the costs beneficiary to have his or her costs assessed, "outstanding costs" means the amount of costs that have been assessed in one of the ways costs may be assessed.
2. The applicant's costs have not yet been assessed; they will be assessed on my making orders setting the applicant's costs on a lump sum basis. Thus, there are no "outstanding costs" in relation to the applicant on which interest could be payable.

1. I propose to order that, pursuant to r 22.02(2)(a) of the GFL Rules, that the applicant's costs be set in the amount of $51,700.

I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis.

[1] GMZ18 v Minister for Immigration, Citizenship and Multicultural Affairs [2024] FedCFamC2G 335 (17 April 2024).

[5] Frigger v Trenfield (No 12) [2022] FCA 900.

[6] Hancock v Rinehart (Lump Sum Costs) [2015] NSWSC 1640.

[7] CIQ17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (No 2) [2020] FCCA 3467.

[8] CIQ17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (No 2) [2020] FCCA 3467, at [26]; referred to with approval in FJS18 v Minister for Immigration, Citizenship and Multicultural Affairs [2024] FCA 433, at [44] (Burley J). See also Doe v Filliter [1844] EngR 622; (1844) 13 M & W 47 at 51; [1844] EngR 622; 153 ER 20, at page 21, where Pollock CB said: "The taxed costs are a fair indemnity; and if they are not so, the rules which govern taxation ought to be altered."

[9] https://www.fedcourt.gov.au/forms-and-fees/legal-costs/national-guide-counsel-fees.

[10] W & A Gilbey Ltd v Continental Liqueurs Pty Ltd (1963) 81 WN (Pt 1) (NSW) 1, at page 10.

[11] W & A Gilbey Ltd v Continental Liqueurs Pty Ltd (1963) 81 WN (Pt 1) (NSW) 1, at page 10.

[12] Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119, at page 120 (von Doussa J).

[13] See, for example, Frigger v Trenfield (No 12).

[14] Tim Barr Pty Ltd & Anor v Narui Gold Coast Pty Ltd [2011] NSWSC 11, at [21].

[15] Baychek v Baychek [2010] NSWSC 987, at [11].

[16] Frigger v Trenfield (No 12), at [11]-[12].

[17] See Doe v Filliter [1844] EngR 622; (1844) 13 M & W 47 at 51; [1844] EngR 622; 153 ER 20, at page 21 where Pollock CB, speaking of an order that costs be taxed, said: "by making the order, merely directs the costs to be taxed, but does not say what the effect of that taxation is to be".

[18] NZYQ v Minister for Immigration, Citizenship and Multicultural Affairs [2023] HCA 37.

[19] As for the duties of a solicitor on the record see QGC Pty Limited v Bygrave [2010] FCA 659, at [52]-[57] (Reeves J).

[20] (5 x $6,400) + (20 x $750) = $32,000 +$15,000 = $47,000.

[21] $47,000 + (10% x $47,000) = $47,000 + $4,700 = $51,700.