Consideration
14 This Court's power to order costs in cases of this kind derives from s 43 of the Federal Court of Australia Act 1976 (Cth). The principles relevant to the question of whether this Court should make an award of costs to be assessed on an indemnity basis were usefully summarised by Kenny J in Morad v El-Ashey (No 2) [2017] FCA 1612 at [6]-[11]:
PRINCIPLES
6 Under s 43(2) of the FCA Act, the disposition of costs is at the discretion of the Court, although it is well-established that this discretion must be exercised judicially: see, for example, Ruddock v Vadarlis (No 2) [2001] FCA 1865; 115 FCR 229 (Ruddock v Vadarlis (No 2)) at [9]. The Court may order that costs awarded against a party are to be assessed on an indemnity basis: see s 43(3)(g).
7 In exercising the discretion to award costs, the Court must take account of any failure by a party to comply with its obligation to conduct the proceeding in a way that is consistent with the overarching purpose of the civil practice and procedure provisions, namely, to facilitate the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible: see FCA Act, ss 37N(4) and 37M(1).
8 In the ordinary course costs will follow the event and, if a party to an application succeeds, then the Court will order the respondent to pay the costs of that application, assessed on a party and party basis, unless there are special circumstances justifying some other order: Ruddock v Vadarlis (No 2) at [11]-[16] (Black CJ and French J). Ms El-Ashey contends that such circumstances exist here and that they justify an order for costs on an indemnity basis.
9 The principles relevant to an award of indemnity costs are well-established. In broad terms costs will be payable on a party and party basis, unless the circumstances of the case justify a departure from the normal course: see Colgate-Palmolive Company v Cussons Pty Limited [1993] FCA 536; (1993) 46 FCR 225 (Colgate-Palmolive) at 233 (Sheppard J). The question is always whether the facts and circumstances of a particular case justify the making of an order for the payment of costs other than on a party and party basis.
10 Plainly enough, the categories in which indemnity costs may be ordered are not closed. Reference to some of the circumstances in which costs on an indemnity basis have been ordered is illustrative, however, of the occasions that have been thought capable of attracting such an award of costs. It has been held, for example, that indemnity costs may be awarded where "the applicant, properly advised, should have known that he had no chance of success" (Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd [1998] FCA 202; (1988) 81 ALR 397 (Fountain Selected Meats) at 401; where an application is wholly untenable and misconceived (Henke v Carter [2002] FCA 492 at [22] (Goldberg J)); and where there is "evidence of particular misconduct on the part of a party that causes loss of time to the Court and to other parties" (Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd [1991] FCA 225 at [22] (French J)).
11 The purpose of indemnity costs was explained in Hamod v State of New South Wales [2002] FCAFC 97; 188 ALR 659 (Hamod) at [20] by Gray J (with whom Carr and Goldberg JJ agreed) as follows:
Indemnity costs are not designed to punish a party for persisting with a case that turns out to fail. They are not awarded as a means of deterring litigants from putting forward arguments that might be attended by uncertainty. Rather, they serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs.
15 I accept Kraneworx' submission that it is appropriate to order costs on an indemnity basis in this case having regard to the matters set out at [13] above. In this case, Kraneworx has promptly and repeatedly drawn DSS Advisory's attention to the defect in the statutory demand and that the debt was disputed. DSS Advisory plainly accepted that there was an issue to be addressed on 30 November 2017. While parties are entitled to contest issues, the fundamental factual issue was clear and DSS Advisory's title to the debt should have been established before the statutory demand was issued. Kranworx was put to considerable unnecessary expense. Further, despite resisting an order for indemnity costs as part of the consent orders to set aside the statutory demand and being given the opportunity to make submissions contradicting Kraneworx' contentions, DSS Advisory has elected not to do so. This put Kraneworx to further cost and DSS Advisory must now be taken to have accepted that such an order is appropriate in this case.
16 Accordingly, I will order that the defendant pay the plaintiff's costs on an indemnity basis.
17 As to the question of the lump sum amount, Kranworx seeks an order for payment of $28,648.90.
18 Ms Losanno has deposed to the costs incurred by Kraneworx:
(1) At annexure "J" are copies of six solicitors' tax invoices in an aggregate amount of $23,806.80 (GST inclusive). The invoices related to the period from 31 August 2017 to 1 February 2018 and include disbursements relating to court filing fees and process servers' fees.
(2) At annexure "K" are copies of four tax invoices from Kraneworx' counsel for an aggregate amount of $12,168.75 (GST inclusive). These invoices relate to the period from 11 September 2017 to 1 February 2018.
(3) Kraneworx is entitled to claim input tax credits in relation to any GST relevant to the invoices issued by its solicitors and counsel. Annexure "L" sets out a costs summary.
19 The costs summary at annexure "L" indicates that:
It has been prepared without the assistance of a costs expert.
The GST on the solicitor's invoices is $1,823.80 and the GST charged in counsel's invoices is $1,106.25. The aggregate amount of solicitor's and counsel's fees less GST is $33,045.50.
The solicitor's hourly rate was $380 and counsel's hourly rate was $375.
Categories of work include drafting affidavits, attending Court, reviewing DSS Advisory's affidavits and drafting submissions.
The lump sum amount of $28,648.90 has been calculated on the basis of 80% of solicitors' fees (excluding GST) and disbursements of counsel's fees (excluding GST), $3,745 in court filing fees and $150 (excluding GST) for process servers.
The amounts claimed falls within Scale and the National Guide to Counsel's Fees.
20 Having regard to annexure "L", the discount of 20% applied to solicitor's costs, the treatment of goods and services tax and having perused the invoices set out in annexures "J" and "K", I am satisfied that it is appropriate to order DSS Advisory to pay the lump sum amount claimed by Kraneworx. Again, having been apprised of the amount of the proposed lump sum order and the evidence and submissions supporting it, DSS Advisory has elected to make no submissions must now be taken to have accepted that a lump sum order in this amount is appropriate in this case.