Jadwan Pty Ltd v Rae & Partners

Federal Court of Australia|2022-10-04|Before: O'Callaghan J

Costs be awarded to the first, second and third respondents in a lump sum in the amount of $119,102.63.
The appellant pay to the first, second and third respondents costs of $119,102.63. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 By way of interlocutory application dated 2 September 2021, the appellant seeks to review an order made by a registrar of this court dated 12 August 2021 in which she ordered that it pay to the first, second and third respondents (the respondents) the sum of $104,541.57 in respect of their costs of the appeal, assessed on a lump sum basis. The respondents had originally sought a total amount of $139,703.90, comprised of professional costs of $13,088.90 (inclusive of GST) and disbursements of $126,615 (inclusive of GST). 2 At the hearing of this application, the respondents accepted (as they accepted before the learned registrar) that they were not entitled to claim any amount by way of GST, and that they were also not entitled to claim a filing fee of $445 in respect of the bill of costs dated 10 February 2021 upon which they rely (the bill of costs). It follows that at the hearing, the disbursements claimed were made up entirely of counsel's fees. 3 Accordingly, the amounts of solicitors' and barristers' fees sought as a lump sum were $11,899 and $114,700, respectively.

The background 4 Before turning to conduct the review of the decision of the registrar, it is necessary that I should say a little about the background of the proceeding. 5 The (unsuccessful) appeal brought by the appellants in respect of which the lump sum costs are claimed by the respondents was, on any view of the matter, both factually and legally very complex. 6 As the headnote to the authorised report correctly recorded (see Jadwan Pty Ltd v Rae & Partners (A Firm) (2020) 278 FCR 1 (Bromwich, O'Callaghan and Wheelahan JJ)), the case involved the following issues: The appellant was a nursing home operator which sought damages against its former lawyers for alleged professional negligence arising out of the revocation of its approval, under the National Health Act 1953 (Cth) as a Commonwealth funded nursing home, by a delegate of the Minister for Health and Family Services. In particular, the appellant claimed that: (i) reasonable advice from its lawyers required that its attention should have been directed to the operation of new legislation relevant to its operation; (ii) if the appellant had received such advice, it would have instructed the lawyers to seek relevant interlocutory relief; (iii) such application would have been successful, and (iv) it would consequently have become an approved provider under the new legislation. The appellant further claimed that its lawyers' breaches of duty caused damage to its economic interests, namely a lost opportunity to continue to conduct its nursing home business at a new premises or alternatively to sell its approvals. 7 The reasons for decision alone comprise over 170 pages of the authorised report. 8 In written submissions filed on behalf of the respondents, the complexity of the proceeding was correctly described in these terms: The claim that was made and maintained throughout the trial of the action was for damages of between $10 to $16 million … The claim in respect of the value of the bed licences was one made very late in the day in the alternative to the primary claim for damages. … The original action was commenced in 2004. There were five respondents. The court book and other documents exceeded 8000 pages. The legislation concerning the operation of nursing homes at various times was required to be considered. The trial lasted for 4 weeks and oral closing submissions were heard over 2 days. The transcript ran to 1184 pages. The judgment ran to 742 paragraphs and over 200 pages. The appeal consisted of 22 grounds and was heard over [four] days. Orders were made permitting the appellant and respondents to file submissions up to 50 pages. The appeal was a rehearing requiring the parties [to] traverse numerous and complex facts … 9 In separate reasons, the Full Court ordered as follows (see Jadwan Pty Ltd v Rae & Partners (A Firm) (No 2) [2020] FCAFC 95 (Bromwich, O'Callaghan and Wheelahan JJ)): 1. The appellant pay the respondents' costs of the appeal to be assessed in a lump sum pursuant to r 40.02(b) of the Federal Court Rules 2011 (Cth). 2. It is directed that a Registrar of the Court is to determine the amount of the respondents' costs in such manner as the Registrar deems fit, and shall then make an order fixing the amount of those costs, which are to be payable within 28 days of such orders. 10 As I have already said, a registrar determined the amount of the respondents' costs in the sum of $104,541.57 and it is in respect of that determination that the appellant now seeks judicial review. The review that I am to conduct is, of course, a de novo review. See generally Bechara v Bates (2021) 286 FCR 166 (Allsop CJ, Markovic and Colvin JJ).

Applicable principles 11 As the Full Court said in Innes v AAL Aviation Ltd (No 2) [2018] FCAFC 130 (Tracey, Bromberg and White JJ) at [12], [17]-[18]: The general power of the Court to award costs is found in s 43(1) of the Federal Court of Australia Act 1976 (Cth) (the FCA Act). Section 43(3)(d) contains an express power to award a party costs "in a specified sum". In addition, r 40.02 of the Federal Court Rules 2011 (Cth) (the FCR) permits a person entitled to costs to apply for an order that the costs "be awarded in a lump sum, instead of, or in addition to, any taxed costs". The purpose of these provisions is the avoidance of the expense, delay and aggravation involved in protracted litigation arising out of taxation: Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 120; Paciocco v Australia and New Zealand Banking Group Ltd (No 2) [2017] FCAFC 146; (2017) 253 FCR 403 at [15]. … Many of the authorities have recognised that the starting point for the fixing of lump sum costs is the charges rendered by the costs applicant's solicitors. However, the authorities also recognise that the costs fixed should be proportionate to the nature, including the complexity, of the case: Bitek Pty Ltd v IConnect Pty Ltd [2012] FCA 506 at [18] (Kenny J). See also Hislop v Paltar Petroleum Ltd (No 4) [2017] FCA 1632 at [7] (Gleeson J). Finally, we respectfully agree with the statement of Markovic J in Fewin v Burke (No 3) at [61] that, in assessing quantum, "the Court is entitled to take into account the evidence that is before it; its own observations of the proceedings and the judge's own assessment experience". As will be seen, these are particularly important considerations in the present case. 12 As Giles JA said in Harrison v Schipp (2002) 54 NSWLR 738 at 743 [22]: Of its nature, specification of a gross sum is not the result of a process of taxation or assessment of costs. As was said in Beach Petroleum NL v Johnson (at 124), the gross sum "can only be fixed broadly having regard to the information before the Court"; in Hadid v Lenfest Communications Inc (at [35]) it was said that the evidence enabled fixing a gross sum "only if I apply a much broader brush than would be applied on taxation, but that … is what the rule contemplates". The approach taken to estimate costs must be logical, fair and reasonable (Beach Petroleum NL v Johnson (at 123); Hadid v Lenfest Communications Inc (at [27])). The power should only be exercised when the Court considers that it can do so fairly between the parties, and that includes sufficient confidence in arriving at an appropriate sum on the materials available (Wentworth v Wentworth (Court of Appeal, 21 February 1996, unreported) per Clarke JA). 13 Further, as Brereton J said in Hancock v Rinehart (Lump sum costs) [2015] NSWSC 1640 at [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. (Footnotes omitted.)

The relevance of the High Court Register 14 The solicitors who performed the solicitors' work referred to in the bill of costs were Mr Tremayne, Ms Barclay and Ms Saunders. The respondents did not dispute that their names did not appear at any relevant time in the Register of Practitioners kept by the High Court of Australia in accordance with s 55C of the Judiciary Act 1903 (Cth) (the High Court Register). 15 Sections 55A, 55B and 55C of the Judiciary Act form part of Part VIIIA of the Act, headed "Legal practitioners", and relevantly provide as follows: 55A Right of barristers and solicitors admitted in federal courts to practise in those courts A person who has been admitted to practise as a barrister or solicitor, or as both, under rules made in pursuance of paragraph (ga) of section 86 of this Act is, subject to those rules, entitled to practise in any federal court as a barrister or solicitor, or as both, as the case may be. 55B Right to practise as barrister or solicitor in federal courts and courts exercising federal jurisdiction (1) Subject to this section, a person who: (a) is for the time being entitled to practise as a barrister or solicitor, or as both, in the Supreme Court of a State; or (b) is for the time being entitled, under a law (including this Act) in force in a Territory, to practise as a barrister or solicitor, or as both, in the Supreme Court of that Territory; has the like entitlement to practise in any federal court. (2) A person is not entitled to practise in a federal court as a solicitor by reason of paragraph (b) of the last preceding subsection unless: (a) he or she has been admitted to practise as a solicitor or legal practitioner by the Supreme Court of the Territory; or (b) he or she practises as a solicitor in the Territory and his or her sole or principal place of business as a solicitor is in the Territory. (3) A person is not entitled to practise as a barrister or solicitor in a federal court by reason of subsection (1) unless his or her name appears in the Register of Practitioners kept in accordance with the next succeeding section as a person entitled to practise in that capacity. … 55C Register of Practitioners (1) For the purposes of section 55B, the Chief Executive and Principal Registrar of the High Court shall cause a Register of Practitioners to be kept at the Registry of the High Court. (2) Where it is shown to the satisfaction of the Chief Executive and Principal Registrar that a person would, but for subsection (3) of the last preceding section, be for the time being entitled by reason of that section to practise as a barrister or solicitor, or as both, in federal courts, the Chief Executive and Principal Registrar shall cause the name of the person, and the capacity in which he or she is to be entitled to practise, to be entered in the Register of Practitioners. … 16 Section 86(1)(ga) of the Judiciary Act provides: 86 Rules of Court (1) The Justices of the High Court or a majority of them may make Rules of Court necessary or convenient to be made for carrying into effect the provisions of this Act or so much of the provisions of any other Act as confers jurisdiction on the High Court or relates to the practice or procedure of the High Court, and in particular for the following matters, that is to say: … (ga) Providing for the admission of persons to practise as barristers or solicitor in any Federal Court, and prescribing the conditions of and qualifications for admission, and continuance of the right to practise as aforesaid; … 17 I need also to set out here some other provisions which are relevant to a submission made by the respondents in their written submissions, not prepared by Mr AB Walker of counsel (who appeared for the respondents), and only faintly put by him in oral submissions before me. 18 Section 4 of the Federal Court of Australia Act 1976 (Cth) defines "lawyer" to mean "a person enrolled as a legal practitioner of a federal court or the Supreme Court of a State or Territory". 19 Rule 40.18 of the Federal Court Rules 2011 (Cth) provides: 40.18 Contents of bill A bill, other than a short form bill, must be in accordance with Form 127 and must: (a) contain particulars of: (i) the work done by the lawyer, their staff and agents; and (ii) the costs claimed for the work; and (iii) disbursements incurred; and (b) have attached to it, or be accompanied by, a copy of the receipt for each disbursement or, if not paid, a copy of the relevant accounts. 20 Rule 40.29 of the Federal Court Rules provides that "A taxing officer is to allow costs for the work done … (b) on or after 1 August 2011 - in accordance with Schedule 3, for the relevant period, if any, mentioned in that Schedule".

The parties' submissions 21 At the hearing of this application, Mr AMJ Meagher of counsel for the appellant initially sought to contend that the solicitors' fees sought to be recovered should be reduced on the basis of "proportionality", but when it was pointed out that each item claimed was in accordance with the applicable scale of costs, that submission was abandoned. 22 In respect of the solicitors' fees, Mr Meagher's remaining point was that they should be disallowed in full or in significant part because the solicitors' names did not appear in the High Court Register kept in accordance with s 55C of the Judiciary Act. 23 In the course of his oral submissions, Mr Meagher mentioned a "costs response" relied on below and prepared by a costs expert, a Ms Fogl. I was told that this document was the foundation of a written submission made to the registrar that certain of counsel's fees should be disallowed, because the registrar did not apply a test of fairness and reasonableness in the assessment of the respondents' costs. But no attempt was made before me to explain the relevance of that costs response to the fixing of a lump sum amount, or why any of the amounts identified were said to be unfair or unreasonable. In any event, I have reviewed that document and I do not accept that any of the items identified in it would be disallowed on a taxation. 24 Mr Walker submitted in effect that no or no significant reduction in counsel's fees should be made. 25 In written submissions filed on behalf of the respondents, and to which Mr Walker briefly alluded, it was also contended that "the [Federal Court] Act and the [Federal Court] Rules have moved on" since the decision in University of Western Australia v Gray (No 25) (2009) 180 FCR 483, and that the relevant "scheme" is now as follows: a. Rule 40.29 provides that on taxation, a taxing officer is to allow costs of the work done in accordance with Schedule 3; b. Item 1 of Schedule 3 sets out the costs allowable for attendances by a lawyer; c. 'Lawyer' has the meaning given by s.4 of the [Federal Court] Act which defines lawyer as "a person enrolled as a legal practitioner of a federal court or the Supreme Court of a State or Territory; d. Rule 40.18 also requires a bill must contain particulars of the work done by the lawyer, their staff and agents. 26 It was contended in those written submissions that, accordingly, "the costs of a legal practitioner of the Supreme Court of Tasmania may be allowed in the taxation or assessment of an order for costs", even if his or her name does not appear on the High Court Register.

The High Court Register point 27 The cases are clear about the consequence of ss 55A-55C of the Judiciary Act. 28 The fees which are the subject of a taxation certificate from a taxing officer must be payable to a practitioner whose name appears on the Register of Practitioners kept by the High Court of Australia pursuant to s 55C of the Judiciary Act. 29 As Dowsett J explained in a judgment in which he was in dissent, but not on this point, in Oil Basins Ltd v Watson (2017) 252 FCR 420 at 432-433 [61]-[62]: Entitlement to practise in federal courts is regulated by Pt VIIIA of the Judiciary Act … Section 55A contemplates admission to practise pursuant to rules promulgated by the High Court. No such rules have been promulgated. Sections 55B and 55C effectively provide that a barrister or solicitor who is entitled to practise in the Supreme Court of a State or Territory is entitled to practise in federal courts, provided that his or her name is on the Register of Practitioners, referred to in s 55C(1). Any consideration of [the solicitor's] entitlement to practise should have started with those sections. Western Australian law may have been relevant to [the solicitor's] entitlement to have her name entered in the Register, and to the extent of her entitlement to practise. See APLA Ltd v Legal Services Commissioner of New South Wales (2005) 224 CLR 322 at [22]. In its written submissions [the appellant] seems to assume that entitlement to practise in this Court is to be derived from r 4.01 of the [Federal Court Rules] … In s 4 of the Federal Court [Act] the term "lawyer" is defined to mean, "a person enrolled as a legal practitioner of a federal court or the Supreme Court of a State or Territory". There is no requirement that the practitioner's name be on the Register. However the Federal Court Act does not purport to regulate entitlement to practise. The definition seems to have been included for the purposes of Part VB, concerning case management, including the obligations of practitioners in that area. Hence use of the term, as defined, for the purposes of the Federal Court Act does not raise any inconsistency between that Act and the provisions of the Judiciary Act relating to entitlement to practise. However the definition has been included in the dictionary contained in the Rules and therefore applies to r 4.01, which rule appears to entitle a party to be represented by a lawyer as so defined. That provision seems to be inconsistent with the requirements of the Judiciary Act in that it does not require, as a condition of the entitlement to practise in federal courts, that the practitioner's name be on the Register. I am inclined to the view that r 4.01 should be read as authorizing only representation by a practitioner whose name is on the Register. Alternatively, the rule may be at least partially invalid. 30 See also University of Western Australia v Gray (No 25) (2009) 180 FCR 483 where the parties agreed that relevant to the determination of the gross costs application there in issue before Barker J was the answer to the following question: Question 1 [State Solicitors] - Is a person who was entitled to but did not have their name entered on the Register of Practitioners maintained pursuant to s 55C(1) of the Judiciary Act … at any times during the course of this proceeding entitled to recover costs as a barrister or solicitor for work undertaken by them in relation to this proceeding in respect of such periods of time as their name did not appear on the Register of Practitioners? 31 For reasons his Honour gave at 502-503 [74]-[77], he answered that question, "No". 32 Mr Walker did not put much store on the written submission that the legal position had "moved on" since Gray, and correctly so. In my view, the submission is not correct, for the reasons given above. 33 Barker J was also asked to determine a second question in Gray: Question 2 [Clerks] - Is a person who was not entitled at any times during the course of this proceeding to have their name entered in the Register of Practitioners maintained pursuant to s 55C(1) of the Judiciary Act … and did not have their name entered in such Register, entitled to recover costs as a barrister or solicitor for work undertaken by them in relation to this proceeding in respect of such periods of time as their name did not appear on the Register of Practitioners? 34 His Honour also answered that question "No", reasoning as follows (at 506-507 [93]-[94]): … it is not open to equate the work done by a person who is a solicitor but not one whose name appears on the Register of Practitioners maintained under s 55C of the Judiciary Act as if they were such a solicitor. The same approach must necessarily spill over into the assessment of gross costs in this case … That is not, to say, however, in my opinion, that the work actually done by an uncertificated practitioner is without value and cannot be the subject of assessment. That work would, in my view, be claimable as work done by a managing clerk or clerk or the like. It would be open to the taxing officer or the court in a taxation or in assessing costs on a gross sum basis, to regard the nature of the work done. What is not appropriate, however, is for the discretion under O 62, r 19 [of the Federal Court Rules 1979 (Cth), now r 40.30(b)] to do justice in any case, to be exercised by simply equating work done by a practitioner who was at material times not on the Register of Practitioners with the work of a certificated practitioner. 35 The costs scale in Schedule 3 to the Federal Court Rules, like Schedule 2 to the previous Federal Court Rules which it replaced, "plainly anticipates that a solicitor who is entitled to practise in the Federal Court can engage persons other than duly certificated legal practitioners … to assist in the preparation and conduct of a proceeding in the Federal Court". See Gray at 507 [95]. 36 For example, item 1 of Schedule 3 provides: 1 Attendances 1.1 Attendances by a lawyer requiring the skill of a lawyer (including attendances in conference, by telephone, on counsel, appearing in court, instructing in court and travelling), for each unit of 6 minutes a sum in all circumstances not exceeding $65: (a) having regard to the lawyer's skill and experience; and (b) having regard to the complexity of the matter or the difficulty or novelty of the questions involved. 1.2 Where any attendance referred to in item 1.1 is capable of performance by a law graduate or articled clerk for each unit of 6 minutes: $24. 1.3 Attendances capable of performance by a clerk or paralegal - for each unit of 6 minutes: $11. 37 Items 1.2 and 1.3 are then picked up in item 3.1 (Reading); item 4.1 (Delegation and supervision); item 5 (Research); item 6 (Electronic document management); item 7 (Masking); item 8 (Collation, pagination and indexing); and item 11.1(i) (Skill care and responsibility).

Counsel's fees 38 In my view, the amounts sought to be recovered in respect of counsel's fees are logical, fair and reasonable. Taking the impressionistic view that one is obliged to take in matters of this sort, it seems to me that the daily and hourly rates charged by senior and junior counsel (namely $6,000 per day and $600 per hour for silk, and $3,000 per day and $300 per hour for junior) were, in my experience, at the lower end of the fees that are charged by commercial barristers practising in this area, especially in a case as complex as this one. 39 Taking a step back, and as I said earlier, the appeal also involved matters of considerable weight and complexity, both as to the facts and to the law. And given the nature of the allegations made against the respondents, the complexity of the legal and factual issues, the length of the hearing of the appeal, the vast volume of material, and the potential damages at stake, it seems to me that total counsel fees of $114,700 is a relatively modest sum, and it should be recovered in full because it is a sum that is fair and reasonable.

Solicitors' fees 40 Having regard to the matters set out above, and given the admitted fact that no relevant practitioner's name appeared on the High Court Register, I would reduce the amount claimed by 63% (namely to $4,402.63) on the basis that such a sum is likely to have been recovered had the work in fact been performed by a law graduate or articled clerk (see item 1 of the Schedule 3 costs scale referred to above, which makes clear that, in round terms, the scale fee for a law graduate or articled clerk is 63% less than the scale fee for a lawyer).

Disposition 41 For those reasons, and weighing the factors I have set out above and taking the broad brush approach referred to in the cases, I will order that costs be awarded to the first, second and third respondents in a lump sum in the amount of $119,102.63 and that the appellant pay that sum to them. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Callaghan.

Associate: Dated: 4 October 2022 SCHEDULE OF PARTIES TAD 28 of 2018 Respondents Fourth Respondent: JANET KAY HOGAN AS THE EXECUTRIX OF THE ESTATE OF THE LATE JOHN MICHAEL HOGAN Fifth Respondent: WORSLEY DARCEY & ASSOCIATES (A FIRM)

Federal Court Rules 1979(Cth)

Federal Court Rules 2011(Cth)rr 40.02, 40.02(b), 40.18, 40.29, Sch

Judiciary Act 1903(Cth)ss 55A, 55B, 55C, 86(1)(ga)

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