Michael Wilson & Partners Ltd v Porter

1. The interlocutory application dated 3 April 2023 for an extension of time in which to apply to review the order of Registrar Segal of 27 January 2023 is dismissed.
2. The applicant do pay the costs of the first and second respondents of and incidental to the interlocutory application.
3. The costs pursuant to order 2 be quantified on a lump sum basis by a registrar acting as a referee after receiving written submission of no more than three pages and any affidavit from each of the parties in accordance with a timetable to be set by the registrar.
4. Subject to further order, the question whether the registrar's report as referee should be adopted will be considered by the case managing judge on the papers that were before the registrar acting as referee without the filing of any additional papers. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

COLVIN J: 1 By orders of this Court made in 2016, Mr Jason Lloyd Porter and Mr Richard Moretti were appointed to administer or realise all or part of the assets of Mr David Ross Slater located in Australia. They were appointed as local representatives of Ms Julie Palmer, the trustee of the bankrupt estate of Mr Slater pursuant to proceedings in the United Kingdom. 2 Mr Porter and Mr Moretti realised the Australian assets of Mr Slater. In 2021, they then sought and obtained orders as to the costs, charges and expenses of the administration of their appointment. Those orders included orders for the payment of costs by Michael Wilson & Partners Ltd (MWP). They also discharged Mr Porter and Mr Moretti from their appointment: Porter, in the matter of Slater (No 3) [2021] FCA 688. 3 MWP sought leave to appeal against the making of those orders. On 1 April 2022, leave was refused: Michael Wilson & Partners Ltd v Porter [2022] FCA 336. Orders were made which, amongst other things, required MWP to pay the costs of the leave application to be quantified on a lump sum basis. An application to reconsider some of those final orders was dismissed: Michael Wilson & Partners Ltd v Porter (No 2) [2022] FCA 901. On 26 August 2022, MWP was ordered to pay costs of the application to reconsider on an indemnity basis with those costs to be determined on a lump-sum basis: Michael Wilson & Partners Ltd v Porter (No 3) [2022] FCA 998. 4 On 27 January 2023, a registrar of this Court made a decision fixing the costs payable pursuant to the two cost orders. The total amount fixed was $78,500. 5 On 28 January 2023, Mr Michael Wilson, who has deposed that he is a director of MWP and an admitted solicitor in New South Wales and the holder of a New South Wales practicing certificate, sent an email to the Registrar (copied to various parties including Mr Porter and Mr Moretti). It began: Please note that we shall be exercising our rights under Subsection 35A (5) of the Federal Court of Australia Act 1976 to apply to the Court for a review in accordance with Rule 3.11, and understand that the deadline expires on 21.02.23, since we are not deemed to have been served until Monday 30.01.23. 6 On 17 February 2023, Mr Wilson tried to e-lodge a letter purporting to exercise rights to review the Registrar's decision. So, it appears that nothing was done by MWP in relation to the exercise of those rights until 21 days after the decision. Even then, there was no attempt to file an application. 7 In the result, it was not until about a week later that a form of notice of objection was sent to the Court by email with a request that it be filed. It was a form of application (Form 128) by which a party may object to an estimate of costs by a taxing officer as provided for by r 40.21 of the Federal Court Rules 2011 (Cth). An objection of that kind also required a payment of $2,000 be made as security. Further email correspondence ensued between the Court and Mr Wilson about the form and arrangements for the security payment. 8 However, the decision by the Registrar was not an estimate for the purposes of a taxation. So much ought to have been obvious to an admitted legal practitioner. Rather, it was a lump sum assessment pursuant to the two cost orders. It was an exercise of delegated judicial power by the Registrar that could be the subject of an application to review de novo: see my reasoning in Caratti v Commissioner of the Australian Federal Police [2021] FCA 1067 at [4]-[6]; and the analysis by Katzmann J in Moroccanoil Israel Ltd v Aldi Foods Pty Ltd (No 2) [2017] FCA 1393 at [19]. An application for review of that kind was required to be commenced within 21 days after the day on which the power was exercised: r 3.11(2) which prescribes the time within which a party may apply to review the exercise of delegated judicial power by a registrar pursuant to s 35A(5) of the Federal Court of Australia Act 1976 (Cth). 9 In the present case, the power was exercised by the Registrar on 27 January 2023. It follows that, on any view, MWP was out of time when it came to lodge what was an incorrect application. 10 Mr Wilson was informed of what was required if he wished to seek a review by email from the Court dated 22 March 2023. In particular, he was told: However, it has been made clear to you that a review application (Form 35) will be accepted for filing if it includes, among the orders sought, an order extending the time for the making of the review application. It will then be a matter for the Court whether to extend time to allow for the making of the review application. 11 Unbowed, Mr Wilson responded the next day in the following terms: Thank you for your email, however as you will recall and as the attached, explains, MWP notified the Court of its objections, at a very early stage, well ahead of any deadline, promptly and in a timely manner. It is and was most regrettable and unfortunate indeed, that the Portal was not accepting filings on this case, initially. Without prejudice to the enclosed and the above, as requested we will proceed to further amend and re-file. 12 On 24 March 2023, Mr Wilson then sent the following email to the Court: We have updated the e‐lodged Form 128, as directed and requested. We believe it is clear MWP acted in a timely manner and invoked its rights. 13 His email met with the following understandable response: I refer to your email below. I again confirm that if you wish to seek a review of the determination of 27 January 2023, you will need to file an application in Form 35 that includes, among the orders sought, an order extending the time for the making of the review application. An affidavit in support should also be filed. To be clear: you cannot initiate a review application by emailing a letter. 14 Confusingly, Mr Wilson then maintained by email dated 27 March 2023 that he had lodged a Form 35 twice which was said to include an application for an extension of time. It was said to have been 'wrongly rejected'. He also asked to be told the precise requirement for supporting the application by affidavit. 15 By a prompt response, he was asked to provide the 'Form 35s' to which he referred. It appears that he then provided the documents to which he was referring. 16 On 31 March 2023, an email was sent from the Court to Mr Wilson in the following terms: Thank you for providing those documents. They are clearly not Form 35s. Each clearly states they are 'Form 128'. As previously advised, no action will be taken in relation to those forms. For your information, I attach a blank Form 35. 17 Unchastened, Mr Wilson responded as follows: Thank you for your emails, however it would seem clear that you have neither properly read nor understood the enclosed, from which it is clear we made our objections very clear, in-time, and further filed and served a Letter followed by a Form 128, and then amended and re-filed the same comprising our Notice of Objections with the changes requested, as well as paying an A$2,000 fee, up-front and in advance. On any analysis what we have done is more than adequate, on any measure especially given, as you know, the portal was not accepting filings in these claims and folios on the relevant date, through no fault of ours, as the record shows and proves. Why are you also now asking us to jump through yet further hoops and to spend and incur yet more time and costs and to file a Form 35, with an affidavit in support, and to apply to and go before a Judge, as well? Seems you simply want to shut MWP out of its rights for no good and proper reasons. 18 Eventually, on 3 April 2023, MWP (by Mr Wilson acting as 'Director & Solicitor') filed an application to review the Registrar's order fixing the costs to be paid pursuant to the two cost orders and for an extension of time to do so, together with an affidavit in support. 19 On 28 February 2024, I heard the application by MWP for an extension of time. I determined that the application must be refused and indicated that I would provide my reasons. These are my reasons. 20 A written submission in support of the application prepared by counsel acting for MWP advanced the following five propositions: (1) The Applicant (MWP) informed both the Court and the Respondents that it intended to apply for a review (and, indeed, attempted to do so, but not by the proper form) within the 21 day period stipulated by the Rules: see [6]-[10] below; (2) although the proper form was filed outside the 21 day period, that goes only to form, not to substance; (3) there is a reasonable explanation for the delay, being an honest but what transpired to be a mistaken relief on MWP's part as to the correct form to use: see [15]; (4) there is at least an arguable case on review: see [16]; (5) there is no prejudice to the Respondents in extending time, or if there is the Respondents acted with knowledge of MWP's intention and attempt to apply for a review, and by their subsequent actions they have brought the disadvantage upon themselves: see [11], [17]. 21 As to (1) to (3), in the circumstances I have outlined, I do not accept that Mr Wilson's conduct is properly characterised by those submissions. There was a considerable delay in filing a proper application and that delay is attributable to Mr Wilson. The time for filing the application expired on 17 January 2023. Nothing was done in time. The application was not filed until 3 April 2023. 22 As to (4), no arguable case has been articulated. The written submission at [16] (referred to in the quoted passage above) was as follows: The argument which MWP wishes to advance on a review is at least reasonably and properly arguable, and further submissions will be provided and grounds for review by MWP's costs lawyers and costs draftsmen, Messrs Blackstone Legal Costs in Sydney, who have already been engaged by MWP. 23 In oral submissions in support of the application, counsel explained that it had been thought that review grounds prepared by cost lawyers would be available. However, by the time of the hearing, that expectation was not fulfilled. It might have been thought that any such 'grounds' could have been considered and formulated before the application to review was filed. In any event, I do not understand why 'grounds for review' might have been contemplated. If leave was given, there would be a de novo exercise of the assessment of the quantum undertaken by a judge. It would not require error to be demonstrated on the part of the Registrar: Robson as former trustee of the estate of Samsakopoulos v Body Corporate for Sanderling at Kings Beach CTS 2942 [2021] FCAFC 143; (2021) 286 FCR 494 at [20], [58]-[70]. Rather, what was needed was some basis that would persuade a judge that a proper assessment would result in a different amount to that which had been determined by the Registrar. Therefore, what was needed in order to demonstrate an arguable case to support the application for an extension of time was some basis upon which it might be said that a judge, considering the matter de novo, might be persuaded to make a materially different decision. No such basis has been demonstrated. 24 In oral submissions, counsel relied upon only one matter. It concerned the procedure that had been followed by the Registrar. It was described in the reasons provided by the Registrar in the following terms: There is a preliminary question as to whether the quantification of the lump sums should be determined on the papers without an oral hearing. The Respondents submitted there was 'no need for further expense to be incurred' for an oral hearing. The Applicant sought an oral hearing submitting that determination on the papers 'never works properly or at all well in any taxation and assessment, worldwide, including in Australia' and 'given the complex issues involved'. In my view, the quantification of the lump sums should be determined on the papers. This is the usual practice and reflects the summary nature of lump sum determinations. In this case, there appears to be no matter raised in the costs summaries or costs responses that would benefit from oral elaboration or debate. 25 The submission advanced by counsel was that, by reason that there had been no oral hearing before the Registrar, MWP had been deprived of an opportunity to scrutinize the material relied upon to support the cost claims. This was said to have been contrary to the procedure whereby lump sum assessments were required to be undertaken which provided for material to support the claims made to be brought to the hearing (but did not require that material to be included in the material filed). 26 The procedure to be followed when a lump sum cost assessment is undertaken is described in the Costs Practice Note (GPN-COSTS). As there stated, the costs applicant should file an affidavit in support, being a Costs Summary. It must include a verification that the costs claimed have been incurred and are capable of being verified 'through source material (such as file records, tax invoices and receipts for payment) should such material be required by the Court to be produced'. 27 Further, the intention is that the procedure should 'streamline and expedite the determination or resolution of the quantum of costs question and not to replicate the taxation process'. Unless leave is given, the Costs Summary should not exceed five pages. As to verifying material, para 4.12 of GPN-COSTS provides: The Costs Applicant is not required to exhibit to the Costs Summary the source material verifying the costs and disbursements claimed. However, such material must be available at the costs hearing. 28 There is further provision in para 4.18 as follows: During the lump-sum costs procedure, including in advance of the costs hearing, the parties must at all times adopt a practical approach and co-operate with each other. This includes a costs party promptly responding to any sensible query raised by another costs party arising from the material filed during the procedure which, if clarified, may narrow the issues in dispute or which, if left unclarified, may make the lump-sum costs process less efficient. 29 It was said that MWP had made a request for an in-person hearing. However, there is no evidence that there was any request made of those acting for Mr Porter and Mr Moretti for information prior to the hearing. Nor was there any submission advanced as to why it might be necessary or appropriate in the circumstances of the case to call for or refer to the supporting material. Rather, a submission was filed by MWP in which, amongst other things, it sought proof of the cost claims on the basis of a submission that absent details 'it is impossible to properly begin to understand, review and comment thereon'. 30 As to that submission, the registrar's reasons (after referring to para 4.18 of GPN-COSTS) said: In my view, the level of detail sought by the Applicant in relation to the 1 April 2022 claim was unnecessary and inappropriate for the efficient conduct of the lump sum costs process. 31 It is not the case, as was suggested by counsel in submissions for MWP, that a request for an in-person hearing by a party objecting to the amount of costs claimed by a costs applicant on a lump-sum basis must be acceded to by a registrar. It is still open to a registrar to form the view that an in-person hearing is not necessary in all the circumstances and that the hearing can be conducted on the papers. One of those circumstances may be that a reasonable request has been made in advance of the hearing for supporting information and the costs applicant has not responded to that request with the consequence that proper objections cannot be raised. Another may be that the objecting party has raised reasonable concerns which make it appropriate to have regard to supporting information. Still another may be that the amount of costs in issue justifies scrutiny of supporting information. There may be others. However, no such reason was articulated by MWP in the present case, either before the Registrar or on the present application. Rather, the claim made was to the effect that in every case where an objecting party wanted a hearing in order to scrutinise the supporting information then an in-person hearing must be convened. I do not accept that submission. It was open to the Registrar to form a view that the assessment could be conducted fairly and consistently with the objectives of GPN-COSTS by undertaking the assessment on the papers (subject always to the right to seek a review de novo of the assessment by a judge who would then consider whether it is appropriate for any such review to be conducted on the papers). 32 It was further suggested that the failure by the Registrar to conduct an in-person hearing meant that the hearing 'miscarried' in some fundamental way. No such issue is live on the present application. The issue raised by the present application is whether there should be an extension of time allowed in which to seek review of the exercise by the Registrar of delegated authority. It presumes the existence of delegated judicial power that is exercised subject to a right of review by a judge. That is to say, it presumes that the Registrar has made a decision that is not a legal nullity and is a sufficient foundation for a review de novo by a judge. 33 As to (5), there is prejudice to the respondents. It takes the form of delay in proceedings the course of which have already been substantially delayed by the conduct of MWP. In that regard, I observe that the orders bringing the administration by Mr Porter and Mr Moretti to an end were made in 2021. Since then, they have been the subject of unsuccessful applications for leave to appeal and then to revisit the orders refusing leave to appeal. Indemnity costs have been ordered against MWP because of its conduct in the proceedings. The interests of finality stand against the application. 34 Further, the amounts involved do not warrant further delay. If leave was given, the issue for consideration by a judge of this Court (from the perspective of MWP) would be whether the lump sum costs should be assessed in an amount that was materially less than the amount of $78,500 (noting that a judge could increase the amount on a hearing de novo). However, there would be no prospect of a substantial reduction given the nature and extent of the costs covered by the orders. That is to say, at best, only a modest part of the amount of $78,500 would be at issue. 35 In submissions on behalf of MWP it was said to own 67% of something described as the Temujin Partnership, which is said to have been found to have assets of greater than US$69 million. For a party with financial standing of that magnitude it could not be said that it would suffer any real financial prejudice from being unable to now further delay these proceedings by challenging the Registrar's cost determination given the amount in issue. No other prejudice was suggested. 36 For those reasons, I refused the application for an extension of time, with costs. 37 In order to ensure efficiency in the assessment of the quantum of those costs, and having regard to the events that had transpired in relation to the assessment of lump sum costs pursuant to previous orders, I also made orders for assessment of costs by a registrar acting as referee. I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Colvin.