Kumar v Secretary, Department of Social Services

1. The appellant pay the respondent's costs fixed in the sum of $20,922.26. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REEVES J: 1 On 24 February 2017, I dismissed Mr Kumar's appeal from a decision of the Federal Circuit Court which, in turn, dismissed an appeal from the Administrative Appeals Tribunal (see Kumar v Secretary, Department of Social Services [2017] FCA 158 (Kumar)). I also held that Mr Kumar must be ordered to pay the costs of that appeal. 2 When I delivered judgment, the Secretary applied to have the quantum of any costs order fixed in a lump sum. Accordingly, I made orders directing the parties to file and serve materials directed to that issue. 3 Ms Campbell, for the Secretary, filed an affidavit in which she provided a summary of the costs the Secretary had incurred in the appeal. She stated that the amounts set out in the summary fell within those allowable under Schedule 3 of the Federal Court Rules 2011 (Cth) (the Rules), the Federal Court's National Guide to Counsel's Fees and the Federal Court's National Guide to Discretionary Items Bills of Costs. According to that summary, Ms Campbell estimated that the Secretary had incurred $18,723.84 in professional costs (excluding the costs of preparing the costs summary) and a further $1,208.40 for advice obtained from the Australian Government Solicitor in the course of the appeal, bringing the total to $19,932.24. She stated that the Secretary sought 75% of that total, which equals $14,949.18 (excluding GST). In addition to these items, she stated that the Secretary had incurred disbursements totalling $5,973.08 (excluding GST) for counsel's fees. Finally, she stated that the Secretary did not claim any amount for skill, care and responsibility. 4 Ms Campbell submitted that the following circumstances are relevant to determining the costs in this appeal. First, that the appeal was commenced on 13 April 2016, with a supplementary notice of appeal filed on 3 May 2016. Secondly, that consent orders were made staying the costs orders made by the Federal Circuit Court pending the outcome of the appeal. Thirdly, that the notice of appeal raised "lengthy" grounds of appeal. Accordingly, relying on r 40.02(b) of the Rules and s 43(3)(d) of the Federal Court of Australia Act 1976 (Cth), Ms Campbell submitted that Mr Kumar should be ordered to pay the Secretary's costs fixed in the sum of $20,922.26. 5 Mr Kumar stated in an affidavit that he filed on this lump sum costs issue that the amount of work undertaken on the appeal by the Secretary was excessive and that he was unable to pay any costs, due to his poor financial circumstances. He also claimed that similar legal issues to those raised in his appeal, namely the interpretation of s 94 of the Social Security Act 1991 (Cth), were dealt with in Secretary, Department of Social Security v Pusnjak [1999] FCA 994 and in that case the Court ordered that there be no order as to costs. I interpose to note that the costs order in that matter was made by consent and, moreover, as I have mentioned above, I have already decided to make a costs order against Mr Kumar, the only issue is the quantum of that order. Nonetheless, it is worth noting that, while I accept that Mr Kumar's financial situation is difficult, that has to be balanced against the fact that Mr Kumar has now unsuccessfully pursued essentially the same issue through five levels of review (see Kumar at [1]), without any apparent concern for his financial situation or the extra costs this pursuit has inflicted on the public purse. 6 Recently, in Royal v El Ali (No 3) [2016] FCA 1573 (Royal), Davies J outlined the principles that apply with respect to the Court's power to order lump sum costs as follows (at [10]): Whilst the Court has a broad discretion to award costs orders, the Court's preference, wherever it is practicable and appropriate to do so, is to make a lump-sum costs order in order to finalise the costs issue and avoid, where possible, potentially expensive and lengthy taxation of costs hearings: Federal Court of Australia Practice Notes, Costs Practice Note (GPN-COSTS) 25 October 2016, at [3.3] and [4.1]. The expense, time and delay involved in a taxation of costs are all matters to take into consideration in determining whether to fix costs, bearing in mind s 37M of the Federal Court of Australia Act 1976 (Cth) and the objective of facilitating the just resolution of disputes as quickly, inexpensively and efficiently as possible. The financial capacity of the party liable to pay the costs is also a consideration where the successful party is already likely to be out of pocket in respect of costs and taxation would add an additional unrecoverable cost. There is no particular characteristic of a case though which must exist before a gross sum costs order can be made: Australasian Performing Rights Association Ltd v Marlin [1999] FCA 1006. The power may be exercised whenever the particular circumstances of the case warrant it: Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 ("Beach Petroleum v Johnson") at 122-123. If a lump-sum costs order is to be made, the Court should be confident that the approach taken to the estimate of costs is logical, fair and reasonable. The Court should be astute to avoid both overestimating the recoverable costs and underestimating the appropriate amount, for example by applying an arbitrary discount to the amounts claimed: Beach Petroleum v Johnson at 123. 7 More recently still, in LFDB v SM (No 4) [2017] FCA 753, Griffiths J observed (after quoting the above passage from Royal) that (at [5]): In addition, it might be noted that, in making a lump sum costs order, the Court is not required to engage in a detailed examination of the kind that would be appropriate in a formal taxation or costs assessment (see Bitek Pty Ltd v IConnect Pty Ltd [2012] FCA 506; 290 ALR 288 at [23]). 8 Finally, I note the well-established principle that costs are awarded to indemnify the successful party, not to punish the unsuccessful party: Latoudis v Casey (1990) 170 CLR 534 at 543 per Mason CJ; Cachia v Hanes (1994) 179 CLR 403 at 410 per Mason CJ, Brennan, Deane, Dawson and McHugh JJ.