Julstar Pty Ltd v Hart Trading Pty Ltd

FRONTLINE RECRUITMENT GROUP PTY LTD ACN 078 126 851

JUDGE: RANGIAH J DATE: 27 MARCH 2014 PLACE: BRISBANE

REASONS FOR JUDGMENT 1 The appellants have appealed from the judgment of Greenwood J in Julstar Pty Ltd v Hart Trading Pty Ltd [2013] FCA 1359. His Honour dismissed the appellants' proceeding and ordered that they pay the respondents' costs on a party and party basis up to a certain date and on an indemnity basis after that date. 2 The first and second respondents filed an application seeking the provision of security for their costs of the appeal. The third and fourth respondents filed a separate application for security for their costs. 3 I heard the applications on 27 March 2014 and gave the parties an indication of the orders that I proposed to make. I asked the parties to provide draft orders and I subsequently made the orders. 4 The appellants have requested reasons for my judgment. These are my reasons. 5 The applications for security for costs were brought pursuant to s 56 of the Federal Court of Australia Act 1976 (Cth) and r 36.09 of the Federal Court Rules 2011 (Cth). 6 Section 56 of the Federal Court of Australia Act provides, relevantly: (1) The Court or a Judge may order an applicant in a proceeding in the Court, or an appellant in an appeal under Division 2 of Part III, to give security for the payment of costs that may be awarded against him or her. (2) The security shall be of such amount, and given at such time and in such manner and form, as the Court or Judge directs. 7 Rule 36.09 of the Federal Court Rules provides relevantly: (1) A party may apply to the Court for an order that: (a) the appellant give security for the costs of the appeal, and for the manner, time and terms for giving the security; 8 The appellants did not oppose the making of an order that they provide security for costs. The only issue that remained to be decided was the quantum of the security. The appellants submitted that such security should be limited to $35,000 for the first and second respondents and $57,500 for the third and fourth respondents. 9 The third and fourth respondents sought security for costs in the amount of $137,000. That figure was based upon an assessment of their anticipated costs by Mr Adam Bloom, a legal practitioner who is a specialist costs consultant, in the amount of $135,000. The first and second respondents sought an amount of $75,000, representing an estimate of their anticipated costs by Mr Bentley Coogan, their solicitor, made by adjusting Mr Bloom's assessment. 10 The appellant relied upon an assessment of the respondents' anticipated costs as between party and party prepared by Ms Kerrie-Ann Rosati, also a legal practitioner who is a specialist costs consultant. Ms Rosati disputed Mr Bloom's assessment and assessed the third and fourth respondents' anticipated party and party costs at $57,500 and those of the first and second respondents at $35,000. 11 I did not understand any of Mr Bloom, Mr Coogan or Ms Rosati to suggest that there was any precision in their assessments of costs. Each of their estimates proceeds upon assumptions as to what items of work will be performed, how long it will take to perform each of those items and what would be considered reasonable upon a taxation. 12 In Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd (1995) 134 ALR 187, Lindgren J, referring to s 56 of the Federal Court of Australia Act, said at 197: The terms of these provisions do not, apart from the use of the word "security" itself, give any guidance as to the amount of security that should be ordered. The amount is in the discretion of the court and should be such sum as the court thinks just, having regard to all the circumstances of the case. Obviously, a factor of prime importance will be the amount of a respondent's costs which an applicant, if unsuccessful, will be ordered to pay to the respondent if the proceeding continues to a determination by the court. But the estimation of that amount involves many factors, some of them imponderable. Generally speaking, it cannot be assumed that a failure by an applicant will be on any particular basis. Moreover, the course of events down to and during the trial may be relevant to the particular order for costs to be made. The assessment of the work which will be done in the respondent's interests is also difficult. 13 In Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497, French J (as he was then) said at 515: In fixing the amount of the security the court must look first at the whole case and take into account, inter alia, the chance of it collapsing without coming to trial. It is not bound to give the amount of security which a defendant says will be the amount of his costs. The court may in such a case, order somewhat less than if there seems to be every prospect that the action will be fought to a finish. The court does not set out to give a complete and certain indemnity to a defendant. The process of estimation embodies to a considerable extent, necessary reliance on the "feel" of the case after considering relevant factors. (Citations omitted.) 14 The principal issues in dispute were: (a) whether Mr Bloom's assessment had been made on an indemnity basis, rather than as between party and party; (b) whether the amounts ordered to be given as security for costs should include the costs of each application for security for costs; (c) whether an allowance should be made for each of the two counsel engaged by the third and fourth respondents, and, if so, the appropriate daily rates; (d) whether an allowance should be made for the cost of the third and fourth respondents obtaining counsel's advice on prospects of success. 15 As to the first of those issues, it quickly became clear that Mr Bloom had assessed the third and fourth respondents' costs as between party and party, and not on an indemnity basis. He expressly deposes that his assessment was made under the scale provided for in Sch 3 of the Federal Court Rules. 16 As to the second issue, a starting point is that the parties agreed that I should order that the costs of the applications for security for costs be costs in the appeal. Section 56 of the Federal Court of Australia Act provides that the Court may order an appellant to "give security for the payment of costs that may be awarded against him or her." If the respondents are successful in obtaining an order for costs of the appeal, then they will recover their costs of their respective applications for security for costs. Therefore, the costs of each of the applications for security for costs may be awarded against the appellant on a party and party basis. It is appropriate to make an allowance for such costs. 17 As to the third issue, the complexity of the appeal is relevant. Some idea of the complexity may be gauged from the fact that Greenwood J's judgment is 208 pages (784 paragraphs) long. The amended notice of appeal contains 19 separate grounds. The appeal has been set down before a Full Court for two days. In Stanley v Phillips (1966) 115 CLR 470, Barwick CJ said at 479, "The question is whether the services of more than one counsel are reasonably necessary for the adequate presentation of the case." My opinion is that the question posed by Barwick CJ should be answered affirmatively in the circumstances of this appeal. 18 The National Guide to Counsel Fees published by the Federal Court provides for a daily rate ranging from $900 to $4,200 per day for junior counsel and $2,060 to $6,400 per day for senior counsel. I considered that an allowance of $9,000 per day in total should be made for the cost of senior and junior counsel. 19 As to the fourth issue, I considered that it was reasonable to allow an amount for the third and fourth respondents to obtain advice on prospects of success from counsel. Section 37N of the Federal Court of Australia Act requires parties to a civil proceeding to consider, at an early stage, whether an attempt should be made to settle a proceeding, including an appeal. I accept that, in some cases, that may require a respondent to obtain an advice on prospects of success from counsel. I consider that this is a case in which a taxing officer may well decide that it is reasonable to obtain such an advice. Further, obtaining an advice on prospects of success will mean that less time will be required by counsel for subsequent preparation. I took that factor into account by reducing the allowance for preparation. 20 The third and fourth respondents produced a schedule setting out various items of work which Mr Bloom considered was required, his estimates of the time required for all items and the costs involved for each item. The schedule compared Ms Rosati's assessment for each item. The first and second respondents prepared a similar schedule. During the hearing I indicated my view as to the appropriate amount to be allowed for each item on each schedule. I took a broad-brush approach, taking into account what French J described in Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd as the "feel" of the case. I consider that my reasons as to each item are sufficiently indicated in the transcript. 21 Mr Bloom estimated the third and fourth respondents' party and party costs at $135,000. Taking into account my views on the four issues indicated above, but reducing various components of Mr Bloom's assessment to amounts that I considered are more likely to be allowed on a taxation, produced a figure of $103,700. I was prepared to order security for costs in the amount of $95,000, taking into account the vicissitudes of the litigation. 22 There was less in dispute about the amount of security sought by the first and second respondents. They propose to engage only junior counsel. They do not intend to obtain any advice on prospects of success. Taking into account the figures that I assessed as appropriate for the various items claimed, the figure obtained was $60,200. I was prepared to order $55,000 for security for costs, taking into account the vicissitudes of the litigation. 23 There was agreement between the parties as to the form of security, the time within which security should be provided and the consequence of any failure to provide the security. I made orders accordingly. 24 I wish to emphasise that nothing I have said is intended to affect the conduct of any taxation of costs that may occur following the appeal. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rangiah.