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[2018] FCA 1720
Federal Court of Australia
2018-11-13
Mr J, Bromwich J
Original judgment source is linked above.
BROMWICH J: 1 On 11 May 2017, following judgment being delivered on that day in Prentice v Fewin Pty Limited, in the matter of Prentice [2017] FCA 490, I made the following orders: THE COURT ORDERS THAT: 1. Bankruptcy notice no. BN 208109 issued on 28 October 2016 and served on the applicant on 9 September 2016 be set aside. 2. The respondent pay the applicant's costs of and incidental to the application. 3. Leave be granted to the applicant to seek a lump sum costs order by filing and serving written submissions of no more than 5 pages in length and any affidavit evidence in support within 7 days or such longer period as the Court allows. 4. If any application is made by the applicant for a lump sum costs order, the respondent be permitted to file and serve written submissions of no more than 5 pages in length and any affidavit evidence in support within 7 days of service of the applicant's evidence and submissions. 5. Any such application for a lump sum costs orders be determined on the papers. 2 The applicant, Mr Prentice, duly made an application for a lump sum costs order in accordance with order 3 above, filing both short submissions and an affidavit. The respondent, Fewin Pty Limited, filed submissions in response, but no affidavit, in accordance with order 4 above. Accordingly, there is only one affidavit on the issue of a lump sum costs application. 3 On 24 May 2017, Fewin appealed against the judgment giving rise to the above orders. Related individuals appealed against two other judgments. Those three appeals, each of some complexity, were heard by the Full Court of this Court on 17 August 2017. On 19 October 2018, all three appeals, including the appeal in this proceeding, were dismissed. The only outstanding matter in this proceeding was the determination of Mr Prentice's application for a lump sum costs order. The determination of that application was deferred on Fewin's application pending the outcome of the respondent's appeal. 4 Mr Prentice's submissions on quantum are concise and are better reproduced verbatim than summarised: Quantum of costs 6. The quantum of costs that are claimed are set out in the Affidavit of Sally Susan Nash referred to above. For the purposes of Annexure A of the General Practice Note on Costs, GPN-Costs, it is submitted that these with the Bills of Costs annexed to such affidavit, coupled with the affidavit itself, constitute a Costs Summary. 7. In the circumstances having regard to the period of time that is likely to be occasioned by proceeding through the taxation process provided by Part 40 of the Federal Court Rules 2011, both as to cost and time and particularly having regard to the nature of the costs order this, it is submitted, is an appropriate instance in which there ought be a lump sum costs order. 8. It is submitted that the approach required to be taken in relation to the determination of a lump sum costs order is a two-stage process: firstly, whether it is appropriate to make such an order; and secondly, what is the appropriate specific gross sum in the circumstances? 9. It is submitted that having regard to the history of the matter it is consistent with the "overriding purpose" that this matter be brought to finality at an early date and therefore upon the basis of the materials that are available this is an appropriate instance in which the Court ought exercise its unfettered discretion: Su v Australian Fisheries Management Authority (No 3) [2008] FCA 2018 at [1]; Dunstan v Human Rights and Equal Opportunity Commission (No 3) [2006] FCA 916; and Keen v Telstra Corporation Ltd (No 2) [2006] FCA 930 at [4]. 10. By reference to the Court record, the affidavit of Sally Susan Nash, and the materials identified in these submissions it is submitted that it is possible for the Court to have sufficient confidence about the materials relied upon to enable that discretion to be exercised. 11. On the materials, presently available it is submitted that nothing if any would be "taxed" by a Taxing Officer either at the "estimate stage": rule 40.20 Federal Court Rules 2011, was subsequently following objections and conciliation a formal taxation by a Taxing Officer. 12. The role of the court in determining a lump sum costs order does not involve an item by item taxation: Harrison v Schipp (2002) 54 NSWLR 738 at 743. 13. It open to the court to make a lump sum costs order is sought for the full amount of the amounts identified in the attached Invoices: Hancock -v- Rinehart (lump sum costs) [2015] NSWSC 1640 at [11], [24], [38] - [45] and [57] - [58] and the authorities referred to. However, there is a practice to discount the otherwise indemnity claim upon the basis set forth in the affidavit of Sally Susan Nash sworn 18 May 2017 and filed in support of this application for a lump sum costs order. 5 Fewin's submissions on quantum are similarly concise and, again, are better reproduced verbatim than summarised: 5. If, contrary to the respondent's submission that a lump sum costs order should not be made before completion of the appeal, the Court embarks upon a lump sum costs assessment, the respondent makes the following submissions: 1> the estimate put forward by Mr Prentice is not on a party and party ordinary basis. It is on a solicitor and client basis as it claims the full amount invoiced for costs and disbursements; 2> an hourly rate of $600.00 plus GST is claimed for Ms Nash. This is solicitor and client rate, not ordinary party and party rate. Given that counsel was briefed throughout, the level of instructing solicitor necessary would warrant a maximum hourly rate of $300 plus GST (Schedule 3 FCR) which is the rate the other solicitor involved. Further, the amount claimed includes the same attendances by two solicitors. The hourly rate claimed for secretarial work exceeds the maximum rate for clerks in Schedule 3 FCR; 3> paragraph 11 of the affidavit of Ms Nash is not accurate; 4> at paragraph 22 of the affidavit of Ms Nash, it is stated that GST should not be included in the claim. However, in paragraph 25 of the affidavit, GST is claimed; 5> Counsel's invoices include disbursements. It is not appropriate for counsel to charge disbursements; 6> on lump sum costs on an ordinary basis, the usual discount is 30%. The total should be discounted by 30% after deduction of GST, counsel's claim for disbursements, and calculation of profit costs; 7> the total of costs and disbursements should not exceed $12,500.00. 6 There was no evidence furnished in support of any of the factual assertions made in the above submissions for Fewin. By contrast, most of the factual assertions made in Mr Prentice's submissions are supported by his affidavit evidence. That affidavit was not challenged, and no cross-examination of the deponent, Ms Sally Nash, was sought. Apart from the matters addressed below, there is nothing on the face of the affidavit which leads me to reject or otherwise doubt the factual assertions therein. I have carefully read that affidavit and the annexures thereto. The future cost component in relation to the seeking of the lump sum costs order only eventuated to the extent of the submissions and supporting affidavit. 7 The submissions for Fewin do not take issue with any individual items of expenditure. Nor do they dispute that a lump sum costs order is appropriate (assuming the appeal was unsuccessful). Instead, a global cap of $12,500 is suggested, but no explanation is provided as to how that figure has been arrived at. Accordingly, no weight can be attached to that bare suggestion. The submissions for Fewin then take issue with the claim of GST within the final calculations in the affidavit relied upon by Mr Prentice. This appears to be well-made for the reason that the affidavit did not seek the GST component, as is made clear below. 8 Issue is also taken by Fewin with the degree of discount of solicitor/client costs, but that appears to be a product of a misreading of the affidavit, as a discount of 66% has been applied to solicitors' costs, but not to counsel's costs and disbursements, as being a disbursement in the hands of Mr Prentice's solicitors. A further objection is taken by Fewin by way of a suggestion that a lump sum costs assessment should be further discounted, but no foundation beyond bald assertion was provided for that being an appropriate outcome. 9 In the greater part, the submissions for Mr Prentice are not challenged and may be safely accepted. The following issues going to quantum raised by Fewin or otherwise requiring consideration must, however, be addressed. They have the effect of adjusting the quantum sought downwards to a modest extent. 10 As to the question of GST, the affidavit states (at [22], verbatim): Because of the nature of the circumstances under which Mr Prentice has acted he would, for the purpose of the bankruptcy administration, be entitled to an input credit for GST purposes. For this purpose, the invoices which are annexed hereto should be treated without regard to the GST component contained in them consistent with the general guidelines for GST in the Federal Court Costs Practice Notice. 11 The affidavit summarises the costs claim as follows (at [25], verbatim): As the solicitor acting in relation to the matter I would expect that, if the matter proceeded to taxation there would be amounts not allowed and the overall claim would be reduced. In making the following calculation, notwithstanding what I have said in paragraph 14 above, I have regard to the decisions being the "rule of thumb" referred to in particular In the matter of Palladium Consulting Pty Limited [2013] NSWSC 92 as to an allowance of 66% of solicitor/client costs on a party/party basis. Counsel's fees (including GST) $8,933.40 Solicitor costs (66%) (including GST) $11,425.91 Disbursements (including GST) $1,502.07 Subtotal $21,861.38 Future work estimate (66%) $1,514.70 Plus 10% GST $151.47 Future Counsel fee estimate (including GST) $2,200.00 Total claimed $25,727.55
12 It may be seen that the above calculations do not exclude GST, contrary to the preceding paragraph 22 of the affidavit, reproduced above, which indicates that GST that is paid is able to be claimed by Mr Prentice as an input credit. It may also be seen that the solicitor/client costs are in fact discounted to 66% of the total. As already indicated, I see no reason to discount further in this case by reason of a lump sum being sought. 13 Adjusting the summary from [25] of the affidavit for GST and certain other minor arithmetic matters, the costs that I arrive at are as follows: (1) Counsel's fees and disbursements (which would otherwise have needed to be incurred by the solicitor) ex. GST: $8,121.27; (2) 66% of solicitors' fees, ex. GST: $10,387.19; and (3) Solicitors' disbursements ex. GST: $1,496.88. That produces a total of $20,005.34. 14 At [23] of his affidavit, Mr Prentice seeks the estimated costs of the preparation of the affidavit and submissions by solicitor and counsel, excluding GST and discounting the total by 15% to arrive at the sum of $1,445. I consider it appropriate to allow the lesser sum of $1,000 for the submissions and affidavit, excluding GST. Adding that to the prior total above and rounding down, I arrive at a lump sum amount of $21,000. 15 In all of the circumstances, it is appropriate to order that Fewin pay Mr Prentice costs and disbursements of, and incidental to, Mr Prentice's successful application to set aside bankruptcy notice no. BN 208109 issued on 28 October 2016 and served on him on 9 September 2016, and the costs of this lump sum application, in the total lump sum of $21,000. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bromwich.
Prentice
Fewin Pty Limited, in the matter of Prentice