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[2017] FCAFC 146
procedural. The Court ordered that the identified costs be awarded in a lump sum pursuant to r 40.02(b), that quantification occur jointly with costs in the related VID 149 of 2014 and VID 811 of 2010 matters...
After ANZ won the Paciocco bank-fee appeals, it asked the Full Court to fix its recoverable costs as single lump sums rather than send the bills through the slow and expensive traditional taxation process. The Paciocco parties objected, saying taxation was needed to examine closely the large sums spent on expert evidence and that earlier June 2015 reasons had locked in taxation. The Court rejected those arguments. It held that the case was large and complex, that the Costs Practice Note now treats taxation as the exception, and that a lump sum assessment would still allow any necessary deep dive into particular cost categories. Because the Paciocco litigation was closely linked to the Andrews class action and the two appeals had been heard together, the Court ordered that all the cost quantification exercises be dealt with at the same time by one judge (Middleton J) to avoid duplicated effort and inconsistent decisions, while making clear that each proceeding's costs must still be assessed separately on their own merits. ANZ was also awarded its costs of bringing the lump-sum applications. The detailed directions for how the lump-sum hearing will run were left to the single judge.
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2 cited instruments linked from this judgment.
The underlying dispute concerned whether ANZ's late-payment fees on consumer and commercial credit-card accounts were unenforceable penalties. That litigation was conducted as two related class actions with almost identical claims, the same solicitors and litigation funder. The proceedings were managed so that work done in the earlier Andrews proceeding (VID 811 of 2010) was reused in the Paciocco matter. After a trial before Gordon J in which the applicants were largely unsuccessful, two appeals were brought and heard together by the same Full Court (Allsop CJ, Besanko and Middleton JJ).
On 8 April 2015 the Full Court dismissed Mr Paciocco's appeal with costs (VID 141 of 2014, Order 1) and allowed ANZ's appeal (VID 149 of 2014), setting aside the primary judge's "no costs" order and substituting an order that the applicants pay ANZ's costs of the first-instance proceeding (subject to a limited carve-out for specifically ordered interlocutory costs). On 5 June 2015 the Full Court varied that costs order to exclude ANZ's costs of preparing an expert report of Dr Finch and ordered the Paciocco parties to pay 95% of ANZ's costs of an interlocutory application they had filed. Those earlier reasons are reported as Paciocco v Australia and New Zealand Banking Group Limited [2015] FCAFC 50 and Australia and New Zealand Banking Group Limited v Paciocco [2015] FCAFC 78.
By interlocutory applications filed on 31 March 2017 in each appeal, ANZ sought orders that the existing costs orders in its favour be awarded as lump sums under r 40.02(b) of the Federal Court Rules 2011 (Cth). ANZ relied on two affidavits of Alyson Ashe, a legal costs consultant, which explained the likely length and expense of a taxation in a large, complex commercial file and the mechanisms available under the lump-sum procedure to permit targeted scrutiny of disputed categories, including the substantial costs incurred in relation to the evidence of Mr Inglis. The Paciocco parties opposed the applications on three main bases: (1) the June 2015 reasons had, they said, fixed taxation as the quantification method and preserved their "normal rights on taxation"; (2) ANZ had not shown that a lump-sum process could fairly assess the expert costs; and (3) joint quantification with the Andrews proceeding risked an impermissible global assessment.
The Full Court heard the interlocutory applications on the papers and delivered judgment on 15 September 2017. It rejected each of the objections, held that lump-sum orders were appropriate, ordered that the costs of the interlocutory applications themselves be paid by the Paciocco parties on a lump-sum basis, directed that quantification be conducted jointly with the costs of the related appeals and the Andrews proceeding (but without a global approach), and referred the quantification and all further directions to Middleton J (or any other judge dealing with the Andrews lump-sum application). The Court emphasised at [32] and [35] that while joint hearing was efficient, each proceeding's costs must still be assessed by reference to costs "fairly and reasonably incurred" in that litigation.
The Court's reasoning begins with the statutory source of power. At [13]-[14] it cites s 43 of the Federal Court of Australia Act 1976 (Cth), which expressly authorises an award of costs "in a specified sum", and r 40.02(b), which permits a lump-sum order instead of or in addition to taxed costs. The purpose of the rule, drawn from Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 120, is "to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation" ([15]).
The Court then places central weight on the Central Practice Note and the Costs Practice Note (GPN-COSTS) issued by the Chief Justice on 25 October 2016. At [16] the judgment records that the Costs Practice Note states the Court's preference, "wherever it is practicable and appropriate", is to make lump-sum orders "so as to finalise costs and avoid potentially expensive and lengthy taxation hearings". Taxation "should be the exception" and be confined to matters that cannot otherwise be determined ([16]). The guiding principles are reduction of delay and cost ([16]).
The Full Court expressly rejected the Paciocco parties' reading of the June 2015 reasons. At [24]-[25] it explains that the earlier observations about "normal rights on taxation" were made only in the context of refusing an inquiry into costs and were not a direction that taxation must occur. Nothing in those reasons precluded a later lump-sum order if otherwise appropriate.
On the merits, the Court noted at [27] that the proceeding had already been described by the Full Court as "a large and factually and legally complex commercial case". Ms Ashe's evidence demonstrated that taxation would be inefficient and costly, whereas a lump-sum process would allow earlier identification of disputed items, opportunities for ADR, and Court directions for any necessary deeper inquiry ([30]). The Court accepted Ms Ashe's opinion that a Bill of Costs in the traditional form is not well suited to complex litigation and that the lump-sum procedure enables the Court to obtain whatever level of detail is required ([30]-[31]).
The Paciocco parties' concern about expert costs (particularly Mr Inglis) was met by the statement at [18] and [31] that a lump-sum award does not prevent "a close inquiry of costs relating to a particular issue or category of costs" if the Court thinks it appropriate. The Costs Practice Note and Hudson v Sigalla (No 2) [2017] FCA 339 at [30] were cited for this proposition.
Finally, the interrelated nature of the litigation supplied a positive reason for joint determination. The two class actions and the Andrews proceeding had overlapping evidence and issues; the trial judge had deliberately used work from Andrews in the Paciocco trial ([34]). Joint quantification would avoid the "difficulty and expense of allocating the cost of each item of work between the various proceedings" and reduce the risk of inconsistent approaches ([35]), provided assessment remained proceeding-specific. The Court expressly disclaimed any intention to assess costs on a "global basis" ([32]).
Costs of the interlocutory applications followed the event and were themselves ordered on a lump-sum basis ([37]).
Before the 2016 Costs Practice Note, lump-sum costs orders were available but not the default position. Beach Petroleum (1995) had established that the power existed and that its purpose was to avoid the expense and delay of taxation, yet in practice taxation remained the ordinary course in most matters. Decisions such as Hudson v Sigalla (No 2) [2017] FCA 339 confirmed that a lump-sum order did not preclude detailed examination of discrete issues, but the procedural culture still favoured taxation in complex cases.
The Costs Practice Note (GPN-COSTS) effected a deliberate policy shift. Paragraph [3.3] (quoted at [16]) states that the Court will proceed on the basis that taxation "should be the exception". The Practice Note encourages sophisticated costs orders, use of registrars, referees, and early identification of disputed categories so that the quantification exercise itself does not become another protracted dispute. The Central Practice Note reinforces that the quantum of costs of a successful party should not be delayed.
After Paciocco (No 2), the law is clearer in two respects. First, in large, complex commercial litigation a lump-sum order will ordinarily be regarded as the appropriate course unless some feature makes it unsuitable ([19]-[20]). Second, the fact that earlier reasons have referred to "rights on taxation" does not preclude a later lump-sum order; the Court will examine the context in which those remarks were made ([25]). The decision also illustrates that joint quantification of costs across related proceedings is positively desirable where the factual and legal overlap is substantial, provided each proceeding's costs are kept distinct ([32]-[36]).
The judgment leaves the detailed mechanics (length of affidavits, subpoena powers, use of a registrar at the hearing, etc.) to the single judge, thereby preserving flexibility while endorsing the policy of the Practice Note.
"[15] The purpose of such a rule is 'to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation'."
Plain English: The whole point of allowing a judge to fix costs as a single sum is to stop the parties fighting about every single item on a bill for years.
"[16] … the Court should now proceed on the basis that taxation 'should be the exception' and confined to matters which are unable to be determined otherwise: Costs Practice Note at [3.3]."
Plain English: Taxation is no longer the normal way to work out how much one side must pay the other. A fixed-sum order is now the starting point unless there is a good reason why it cannot be done.
"[18] … in making a lump sum award of costs, the Court … is not precluded from undertaking a close inquiry of costs relating to a particular issue or category of costs, should the Court consider it appropriate to do so."
Plain English: Even if the judge fixes a lump sum, he or she can still drill down into any particular part of the bill (for example, the $X spent on an expert) if it looks questionable.
"[27] It is further apparent from Ms Ashe's evidence that a taxation of the ANZ's costs would be inefficient and costly, and there would be significant time and costs savings achieved by adoption of a lump sum award of costs."
Plain English: The evidence showed that a traditional taxation would take years and cost a fortune; fixing a sum now will save everyone a lot of money and time.
"[35] … the joint determination of the costs of all related proceedings and appeals will in all likelihood avoid the difficulty and expense of allocating the cost of each item of work between the various proceedings. Further, the risk of inconsistent approaches being taken with respect to the allocation of costs if the costs of each proceeding were determined separately will be avoided."
Plain English: Because the cases overlap so much, it makes sense to look at all the costs questions together so the judge does not have to keep splitting every hourly rate three ways and reaching different answers in different court files.
The decision is likely to be applied where:
The precedent is not triggered (or at least the presumption in favour of a lump sum is weaker) in modest-value personal-injury or small-claim matters where taxation is cheap and quick, or where the Court lacks confidence that it can obtain sufficient information to make a "fair, logical and reasonable" assessment.
Although the judgment is relatively recent (15 September 2017), it has been cited as authority for the proposition that the Costs Practice Note has shifted the default position so that lump-sum orders are now the norm rather than the exception. Subsequent decisions have followed its reasoning that complexity and the risk of protracted taxation justify a lump-sum order, and that such an order does not preclude targeted scrutiny of discrete cost categories.
The referral mechanism adopted (sending quantification to a single judge who may sit with a registrar or refer discrete issues to a referee) has been replicated in other large commercial files. Later cases have also cited [32] and [35] for the utility of joint determination of costs across related proceedings provided each proceeding's costs remain separately identified. No appellate court has doubted the correctness of the approach; rather, the decision is routinely treated as an application of the Practice Note to a complex factual setting.
Several practical questions remain for future litigation. First, exactly how "close" an inquiry into a particular category (such as expert costs) can be conducted within a lump-sum hearing without the process morphing back into a de-facto taxation is not spelled out; the Court left that to the single judge. Second, the precise boundaries of "joint determination" are still to be worked through: how does a judge avoid the prohibited "global" assessment while still taking account of the overlap that justified the joint hearing in the first place?
Third, the weight to be given to an earlier costs order that expressly contemplated taxation (as the Paciocco parties argued the June 2015 orders did) is not exhaustively defined; the Court here looked at context, but future cases may test the limits of that approach. Fourth, the extent to which the Costs Practice Note can be varied in a particular case (the Paciocco parties sought removal of page limits and additional subpoena powers) is left to the discretion of the single judge, so different judges may adopt different procedures.
Finally, the interaction between lump-sum orders and common-fund orders or third-party litigation funding remains unexplored in this judgment. Given that the original Paciocco litigation was funded, later cases involving funded class actions may have to consider whether a lump-sum costs order against the representative party can be satisfied from the common fund without further application. These issues will no doubt be worked out in the quantification hearing before Middleton J and in subsequent decisions applying Paciocco (No 2).
INTRODUCTION 1 The Full Court has already made substantive orders in these appeals. The only issue outstanding in both appeals for determination relates to whether a lump sum costs order in favour of the Australia and New Zealand Banking Group Limited ('ANZ') should be awarded by the Full Court, or whether the remaining costs disputes should proceed to taxation in the ordinary course. 2 In these reasons we will adopt the same terminology as used in the Reasons for Judgment dated 8 April 2015 of the Chief Justice. The Chief Justice's Reasons for Judgment are set out in Paciocco v ANZ [2015] FCAFC 50, along with the reasons of Besanko and Middleton JJ (the 'Appeal Reasons'). 3 In the ANZ's appeal (VID149 of 2014), the Full Court made the fourth and fifth costs orders on 8 April 2015 as follows: 4. The order of the Court made on 19 March 2014 be set aside, and in lieu thereof it be ordered that the applicants pay the respondent's costs of the proceeding at first instance (other than costs, if any, specifically ordered in interlocutory proceedings), subject to any variation that may be made pursuant to application by Mr Paciocco and Speedy Development Group for such variation to be filed and served together with any supporting material on or before 4 pm Monday 13 April 2015. 5. The respondents pay the appellant's costs of the appeal. 4 The order of the Court made on 19 March 2014 referred to in the costs order made on 8 April 2015 was an order of the primary judge as to the costs of the proceeding before her. Her Honour ordered that there be no order as to costs, including reserved costs. 5 In the appeal of Mr Paciocco and Speedy Development Group ('SDG') (collectively, the 'Paciocco parties') (VID141 of 2014), Order 1 made by the Full Court on 8 April 2015 was that the appeal be dismissed with costs. 6 On 5 June 2015, the Full Court in the ANZ's appeal relevantly ordered that: … 2. Order number 4 made on 8 April 2015 be amended so as to read as follows: The order of the Court made on 19 March 2014 be set aside, and in lieu thereof it be ordered that the applicants pay the respondent 's costs of the proceeding at first instance other than the costs, if any, specifically ordered in interlocutory proceedings, and the respondent's costs of the preparation of the expert report of Dr Finch dated 11 November 2013. 3. The respondents pay 95% of the appellant's costs of the respondents' interlocutory application dated 13 April 2015 as amended. 7 The Court's Reasons for Judgment for the orders which it made on 5 June 2015 are set out in ANZ v Paciocco [2015] FCAFC 78 (the 'June Reasons'). 8 By separate interlocutory applications dated 31 March 2017 made in each appeal, the ANZ now seeks that the costs orders made in its favour be awarded on a lump sum basis. The ANZ relies upon two affidavits sworn by Alyson Wendy Ashe, a Solicitor and Legal Costs Consultant in support of its applications, one sworn on 16 December 2016 and the second affidavit sworn on 1 March 2017. 9 In the appeal of Mr Paciocco and SDG, the ANZ specifically seeks the following orders: 1. The costs referred to in Order 1 of the Order made by the Full Court on 8 April 2015 be awarded in lump sum pursuant to r 40.02(b) of the Federal Court Rules 2011. 2. The quantification of the costs referred to in Order 1 be conducted and determined jointly, and be consolidated with the quantification of the costs referred to in: a. Order 3 of the Orders made by the Full Court on 5 June 2015 in proceeding VID 149 of 2014; b. Order 5 of the Orders made by the Full Court on 8 April 2015 in proceeding VID 149 of 2014. 3. The quantification of the costs referred to in paragraph 2 above, and the making of such further or other orders and directions in connexion therewith, be referred to the Honourable Justice Middleton (or such other Judge who may determine the Respondent's interlocutory application filed on 19 December 2016 in proceeding VID 811 of 2010). 10 In the ANZ's appeal, the ANZ specifically seeks the following orders: 1. The costs referred to in: a. Order 2 of the Orders made by the Full Court on 5 June 2015; b. Order 3 of the Orders made by the Full Court on 5 June 2015; and c. Order 5 of the Orders made by the Full Court on 8 April 2015; be awarded in lump sum pursuant to r 40.02(b) of the Federal Court Rules 2011. 2. The quantification of the costs referred to in Order 1(a) be conducted and determined jointly, and be consolidated with, the quantification of the costs referred to in Order 1 of the orders sought by the Respondent's interlocutory application filed on 19 December 2016 in proceeding VID 811 of 2010. 3. The quantification of the costs referred to in Order 1(b) and (c) be conducted and determined jointly, and be consolidated with the quantification of the costs referred to in Order 1 of the Orders made by the Full Court on 8 April 2015 in proceeding VID 141 of 2014. 4. The quantification of the costs referred to in paragraphs 2 and 3 above, and the making of such further or other orders and directions in connexion therewith, be referred to the Honourable Justice Middleton (or such other Judge who may determine the Respondent's interlocutory application filed on 19 December 2016 in proceeding VID 811 of 2010). 11 The reference to proceeding VID811 of 2010 is the proceeding known as the 'Andrews Proceeding' (John Andrews & Ors v Australia and New Zealand Banking Group Limited). This Andrews Proceeding is currently before Justice Middleton, where there is a separate application dated 19 December 2016 by the ANZ for certain costs to be awarded in its favour in that proceeding and to be so awarded on a lump sum basis. That application has been adjourned pending a decision of the Full Court in these appeals on the issue now before us. 12 The interlocutory applications brought by the ANZ seeking a lump sum costs order were ordered on 5 June 2017 (with the consent of the parties) to be determined on the papers by the Full Court.
Legal Principles 13 The Court has a general discretion to award costs under s 43 of the Federal Court of Australia Act 1976 (Cth) (the 'Federal Court Act'). Under s 43(3), the Court may, among other things: (a) make an award of costs at any stage in a proceeding, whether before, during or after any hearing or trial; … (d) award a party costs in a specified sum;… 14 Section 43 of the Federal Court Act is supported by r 40.02(b) of the Federal Court Rules 2011 (Cth) (the 'Rules'), which provides: A party or a person who is entitled to costs may apply to the court for an order that costs: … (b) be awarded in a lump sum, instead of, or in addition to, any taxed costs;… 15 The purpose of such a rule is "to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation": see Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 ('Beach Petroleum') at 120. 16 On 25 October 2016 the Chief Justice issued the Central Practice Note: National Court Framework and Case Management (CPN-1) ('Central Practice Note') and the Costs Practice Note (GPN COSTS) ('Costs Practice Note'). The Central Practice Note states that the determination of the quantum of costs of a successful party (in a proceeding) should not be delayed and, to this end, the Court will, where appropriate, facilitate the making of lump sum costs orders. The Costs Practice Note provides that the Court's preference, wherever it is practicable and appropriate to do so, is to make a lump sum costs order so as to finalise costs and avoid potentially expensive and lengthy taxation hearings. It makes clear that the Court should now proceed on the basis that taxation "should be the exception" and confined to matters which are unable to be determined otherwise: Costs Practice Note at [3.3]. The guiding principles are to reduce delay and cost when quantifying costs: Costs Practice Note at [3.1]. 17 The Costs Practice Note provides for the Court to make use of sophisticated costs orders and procedures, and to take such steps as it considers necessary to ensure that it has the requisite level of detail to make a costs determination that is fair, logical and reasonable and to avoid orders that lead to potentially expensive and lengthy taxation hearings: Costs Practice Note at [3.3]. 18 We emphasise that in making a lump sum award of costs, the Court in undertaking the task of assessing costs is not precluded from undertaking a close inquiry of costs relating to a particular issue or category of costs, should the Court consider it appropriate to do so: see e.g. Hudson v Sigalla (No 2) [2017] FCA 339 at [30] ('Sigalla'). The Court is able to adopt its own procedures in inquiring into costs, is able to be flexible in how it conducts that inquiry, including by the obtaining of suitable assistance whether by referee's report or other reporting, and is able to acquire the level of detail needed to make a determination that is fair, logical and reasonable. 19 Whilst the Costs Practice Note now suggests that most cases should have a lump sum costs order approach applied unless there is some characteristic that would make it unsuitable, a lump sum costs order is not mandated in all instances. In all cases it is a matter for the Court to exercise the discretion given to the Court by the Federal Court Act and the Rules as appropriate: see Sigalla at [18]-[19]. 20 There is no particular characteristic that a case must possess for it to be suitable for the making of a lump sum costs order. Particular circumstances that may make a lump sum order especially appropriate include where in a large and complex commercial matter it would save the time, trouble, expense and aggravation of a taxation; where a taxation would require the parties to consume additional time and incur additional expenditure prolonging already protracted litigation; and generally to avoid an ongoing, counter-productive dispute as to costs, in the interests of achieving finality.
The position of the Paciocco parties 21 The Paciocco parties oppose the orders sought in the ANZ's applications. Specifically they oppose: (1) the making of a lump sum order for costs on the basis that the Full Court determined (at the request of the ANZ) in its June Reasons that the costs awarded in favour of the ANZ were to be quantified by a taxation, and that their normal rights on taxation were adequate to protect the Paciocco parties in respect of the specific question as to whether any costs of the ANZ of and relating to the expert evidence (especially of Mr Inglis) were unreasonably incurred; (2) the making of a lump sum order for costs in circumstances where the ANZ has not sufficiently established that the circumstances are such that a lump sum order for costs is warranted and has not established that the lump sum procedure will enable the Court to fairly arrive at an appropriate sum on a logical and reasonable basis, particularly as regards the costs of the experts; and, (3) the making of an order that the quantification of costs in these proceedings "be conducted and determined jointly, and be consolidated with" the quantification of any costs ordered in the Andrews Proceeding, if that is intended to mean that the decision-maker can assess costs on some kind of global basis without regard to the fact that the only allowable costs in each proceeding are those which have been fairly and reasonably incurred in the conduct of that litigation. 22 Nevertheless, the Paciocco parties accept that if the Court was inclined to order that costs be awarded on a lump sum basis, the lump sum costs procedure set out in Costs Practice Note should be varied because it is inapposite for dealing with the kind of issues which will fall for determination. 23 In anticipation that the Full Court may award a lump sum costs order, the Paciocco parties made the following observations in their written submissions: … 36. If a lump sum order for costs is to be made, ANZ proposes that the quantification of the costs and the making of such further or other orders and directions in connexion therewith, be referred to a single judge. If the Court rejects the Paciocco Parties' primary submission that costs should not be assessed on a lump sum basis, they submit, for the reasons outlined above, that in this matter substantial variation would need to be made to the standard lump sum costs procedure set out in Part 4 of the Practice Note. The Paciocco Parties would also support the Court determining that a registrar of the Court should attend the hearing of the lump sum application, consistent with the provisions of para [4.9] of the Practice Note. 37. If a lump sum order for costs is to be made the Paciocco Parties would propose the following directions: i. On or before [date] ANZ is to file and serve an affidavit in support of the lump-sum claim (Costs Summary) in the form directed by paras [4.10]-[4.12] of, and Annexure A to, the Costs Practice Note (GPN-COSTS)(Practice Note), save that: 1. there is to be no limit on the length of the Costs Summary; and 2. the costs of the Inglis Exercise are to be particularised in the same manner as Part B of Annexure A to the Practice Note requires professional costs to be particularised. ii. On or before [date] ANZ is to file and serve any other evidence it proposes to rely upon on the hearing of the lump sum order for costs. iii. On or before [date] ANZ is to make available to the Paciocco Parties for inspection the source material verifying the costs and disbursements claimed [noting that pursuant to para [4.12] of the Practice Note such material must be available at the hearing]. iv. The Paciocco Parties be given leave to have subpoenas issued and may serve notices to produce pursuant to FCR 30.28, requiring the production of documents relevant to the determination of the lump sum costs order, with such processes to be returnable on [date] before the Registrar. v. On or before [date] the Paciocco Parties are to file and serve an affidavit responding to the matters raised in the Costs Summary (Costs Response) in the form directed by paras [4.13]-[4.14] of the Practice Note save that there is to be no limit on the length of the Costs Response. vi. On or before [date] the Paciocco Parties are to file and serve any other evidence they propose to rely upon on the hearing of the lump sum order for costs. vii. On or before [date] ANZ is to file and serve submissions of no more than 15 pages (excluding any annexures). viii. On or before [date] the Paciocco Parties are to file and serve submissions of no more than 15 pages (excluding any annexures). ix. On or before [date] ANZ is to file and serve submissions in reply of no more than 5 pages (excluding any annexures). x. The hearing for determination of the lump sum costs [as appropriately defined] is to be conducted before [a single judge] and a registrar of the Court, and be listed on a date to be fixed with an estimate of 4 days.
Consideration 24 In support of its first basis of opposition to a lump sum costs order, the Paciocco parties referred to a particular passage of the June Reasons, where the Full Court said: … Insofar as wasted costs might be costs which fall outside the definition of costs as between party and party in the Rules, Mr Paciocco is already protected by the definition and his rights on a taxation... ... [W]e wish to make it clear that nothing we have said impinges on the normal rights of the parties on a taxation of costs. For example, we have already alluded to the definition of costs as between party and party which means only the costs that have been fairly and reasonably incurred by the party in the conduct of the litigation (Schedule I of the Rules), and we also note r 40.30 which provides that a taxing officer is not to allow costs that, in his or her opinion, have been incurred or increased through, among other things, unreasonableness. We are not suggesting these rules will or will not be engaged in this case, but simply that they are unaffected by our order and these reasons. 25 However, the Full Court's observations were made in the context of Mr Paciocco's application for an inquiry into costs and were directed to explaining the Court's reasoning for the refusal of that application. The Court was not addressing a question as to whether the quantification of the costs should be by means of taxation or alternatively, whether it should be by means of lump sum assessment, and did not say that this is not a case for lump sum determination. By its observations in relation to taxation, the Full Court was not conveying that no further order for a lump sum award could or should be made in these proceedings. We therefore do not see anything in the June Reasons that would preclude a lump sum costs order now being made if such an order was appropriate. 26 As to the second basis of opposition to the making of a lump sum costs order, we do not agree that a lump sum order is not warranted, or that a lump sum procedure would not be able to allow the Court to arrive at a fair and just determination. 27 As already observed by the Full Court, the Paciocco and SDG proceeding was "a large and factually and legally complex commercial case": see the Appeal Reasons at [2]. 28 It is further apparent from Ms Ashe's evidence that a taxation of the ANZ's costs would be inefficient and costly, and there would be significant time and costs savings achieved by adoption of a lump sum award of costs. 29 The main concern of the Paccioco parties is that a lump sum determination of costs will deny the Court the ability to closely scrutinise the costs in a way that would ordinarily occur through the process of taxation, especially in relation to the expert evidence and the costs incurred in the preparation of the evidence of Mr Inglis (which were said to be substantial). 30 We consider that the Paccioco parties' concern in this regard is unwarranted. Ms Ashe considered that if a lump sum procedure were adopted, the Court would be able to apply the appropriate and necessary level of scrutiny to the costs in respect of Mr Inglis' evidence (for instance), and would not be constrained in any way from ensuring that it had sufficient information to make a logical, fair and reasonable determination. Ms Ashe's opinion as explained in part [7] to [9] of her affidavit sworn 1 March 2017 was that: (7) …[A] taxation does not provide a superior mechanism for determining whether costs claimed by ANZ, including the costs of the evidence of Mr Inglis, were reasonably and fairly incurred. A Bill of Costs in the prescribed form chronologically claiming costs at scale for every item of work done is, in my experience, not conducive, in large and complex litigation, to early and efficient identification of disputed items of costs relating to a particular issue, nor the total costs claimed for that issue. Indeed the indetification of any disputed costs must await the production of the bill of costs (in a case as large and complex as this, a time-frame measured in years rather than months), the objection process and then the commencement of the actual taxation. (8) On the other hand, assessing ANZ's costs by way of a lump sum procedure will enable the paying party to have access to the quantum of costs involved in the claim, and to obtain an expert opinion as to the likely recoverable costs, much earlier. It also provides opportunities for the parties to engage in alternative dispute resolution processes (at the direction of the Court or by agreement) to resolve some or all of the issues in dispute. The lump sum process also enables the Court, at any early stage in the procedure, to provide direction as to whether it considers any particular category of cost should be examined further and in what level of detail. (9) In particular, if the Court considered it appropriate to scrutinise a particular category or categories of costs, there are a number of mechanisms by which it could do so… 31 Further, as the Costs Practice Note makes clear, in making a lump sum award the Court is not precluded from adopting appropriate steps and procedures which may include undertaking a close inquiry of costs relating to a particular issue or category of costs, such as the costs of the preparation of an expert's evidence, should the Court consider it appropriate to do so. 32 As to the third basis of opposition, it makes sense to have the hearing and consideration of the costs of all the related proceedings and appeals conducted together. We agree with the proposition put by the Paccioco parties that it would be inappropriate to assess costs on a "global basis" without proper regard to the specific proceedings themselves. We also do not comprehend what is encompassed by or within the notion of consolidating the quantification of costs exercise in one proceeding with that in another proceeding, and we do not propose to order this to occur. 33 It is important to recall that the proceedings giving rise to the appeals were closely related. Both proceedings were commenced as class actions against the ANZ, with the same legal representation and litigation funder, and with almost identical claims. The appeals were heard and determined together. 34 Apart from these appeals and the original proceedings, the claims made by the Paccico parties were almost identical to the claims in the Andrews Proceeding. The trial judge set the proceedings involving the Paciocco parties down for trial on the basis that the work done by the ANZ in relation to a substantial part of the Andrews Proceeding could be used in the proceeding involving the Paciocco parties. Evidence that was prepared during the course of the Andrews Proceeding, prior to the commencement of the proceedings involving the Paccioco parties, was ultimately adduced in the proceedings involving the Paciocco parties. 35 Subject to what we have said about the inappropriateness of assessing costs on a "global basis", the joint determination of the costs of all related proceedings and appeals will in all likelihood avoid the difficulty and expense of allocating the cost of each item of work between the various proceedings. Further, the risk of inconsistent approaches being taken with respect to the allocation of costs if the costs of each proceeding were determined separately will be avoided. 36 We agree with Ms Ashe's evidence that it would be most efficient, and there would be significant costs savings, if the ANZ's costs in the Andrews Proceeding and its trial costs in the proceedings involving the Paccioco parties were determined together, and if the ANZ's costs of the appeals were determined at the same time.
CONCLUSION 37 In light of the above reasons, we consider that the substantive orders sought by the ANZ should be made and that the various costs orders made in favour of the ANZ be awarded in a lump sum. We also consider that the quantification of such a lump sum be conducted and determined jointly with each relevant proceeding and appeal. As to the applications now before us brought by the ANZ, costs should follow the event, and be determined in a similar manner to the other costs awarded in favour of the ANZ. 38 We do not address specifically the proposed directions of the Paccioco parties referred to in their submissions and set out above. The appropriate directions should be made by Justice Middleton, or the judge who may determine the interlocutory application filed on 19 December 2016 in the Andrews Proceeding. The judge will be in position to hear any further submissions as to the appropriate process to undertake in the particular instances of the costs dispute. 39 Whilst a judge of the Court can hear and determine a lump sum costs award, the determination of the lump sum quantum can be referred to a registrar pursuant to s 35A(1)(h) of the Federal Court Act, and r 3.01(1)(b) of the Rules, read with item 221 of Schedule 2. Alternatively, a registrar may provide assistance with the lump sum hearing: Costs Practice Note at [4.9]. If necessary a separate issue could be referred to a referee by a judge pursuant to s 54A of the Federal Court Act and r 8.6 of the Rules. These will be matters that can be considered by the parties and the judge in determining the appropriate approach to the hearing of the costs dispute. 40 For the above reasons, we will make the following orders: In the appeal of Mr Paciocco and SDG: (1) The costs referred to in Order 1 made by the Full Court on 8 April 2015 be awarded in a lump sum pursuant to r 40.02(b) of the Federal Court Rules 2011 (Cth). (2) The quantification of the costs referred to in Order 1 be conducted and determined jointly with the quantification of the costs referred to in: (a) Order 3 of the Orders made by the Full Court on 5 June 2015 in proceeding VID 149 of 2014; (b) Order 5 of the Orders made by the Full Court on 8 April 2015 in proceeding VID 149 of 2014. (3) The Appellants pay the Respondent's costs of and in connection with the interlocutory application of the Respondent dated 31 March 2017, which costs are to be awarded in a lump sum and the quantification of such costs to be conducted and determined jointly with the quantification of the costs referred to in Order 2 above. (4) The quantification of the costs referred to in Orders 2 and 3 above, and the making of such further or other orders and directions in connection therewith, be referred to Justice Middleton (or such other Judge who may determine the Respondent's interlocutory application filed on 19 December 2016 in proceeding VID 811 of 2010). In the ANZ's appeal: (1) The costs referred to in: (a) Order 2 of the Orders made by the Full Court on 5 June 2015; (b) Order 3 of the Orders made by the Full Court on 5 June 2015; and (c) Order 5 of the Orders made by the Full Court on 8 April 2015; be awarded in a lump sum pursuant to r 40.02(b) of the Federal Court Rules 2011 (Cth). (2) The quantification of the costs referred to in Order 1(a) above be conducted and determined jointly with any quantification of the costs if ordered by the Court as sought by the Appellant's interlocutory application filed on 19 December 2016 in proceeding VID 811 of 2010. (3) The quantification of the costs referred to in Order 1(b) and (c) above be conducted and determined jointly with the quantification of the costs referred to in Order 1 made by the Full Court on 8 April 2015 in proceeding VID 141 of 2014. (4) The Respondents pay the Appellant's costs of and in connection with the interlocutory application of the Appellant dated 31 March 2017, which costs are to be awarded in a lump sum and the quantification of such costs to be conducted and determined jointly with the quantification of the costs referred to in Orders 2 and 3 above. (5) The quantification of the costs referred to in Orders 2, 3 and 4 above, and the making of such further or other orders and directions in connection therewith, be referred to Justice Middleton (or such other Judge who may determine the Respondent's interlocutory application filed on 19 December 2016 in proceeding VID 811 of 2010). I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Allsop, Justice Besanko and Justice Middleton.
Paciocco
Australia and New Zealand Banking Group Limited
The Court ordered that the identified costs be awarded in a lump sum pursuant to r 40.02(b), that quantification occur jointly with costs in the related VID 149 of 2014 and VID 811 of 2010 matters (without global assessment), that the Paciocco parties pay ANZ's costs of the interlocutory applications on a lump sum basis, and that all quantification and further directions be referred to Justice Middleton or such other judge determining the Andrews Proceeding application.