Federal Court of Australia|1991-06-21|Before: Wilcox J

The applicant, the Commissioner of the Australian Federal Police, pay to the defendant Patricia Anne Razzi, one-half of the costs incurred by her in connection with the trial of the matter.

There be no order in respect of the hearing pursuant to the remitted order made by the Full Court on 2 November 1990.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

2. Before going to the submissions put in support of these contrasting positions, it is desirable briefly to note the issues which arose in the case. By reason of the terms of s.243B there were two separate elements in the claim made by the Commissioner against each defendant. First, it was necessary for the Court to be satisfied that the particular defendant was "engaged in" a particular narcotics dealing or a series of narcotics dealings within a particular period. Secondly, if the Court was satisfied on that point, it had to assess the value of the benefits derived by that defendant from his or her engagement in the dealing or series of dealings. If the Court was not satisfied, in respect of any particular defendant, that a benefit had been received, no pecuniary penalty could be imposed on that defendant.

3. Initially, it appeared that the claim would be defended by all three defendants. The claims in respect of Mr Razzi and Mr Lorenzelli involved several alleged dealings, spanning a number of years; the claim against Mrs Razzi involved only one dealing. As the whole story was rather complex, counsel thought that the trial might occupy some weeks. But this estimate was amended, not long before the trial date, when it became known that Mr Razzi and Mr Lorenzelli would not be defending the claims made against them, so there would be no contest by them to the lengthy affidavit evidence which the Commissioner had filed. As the bulk of the affidavit evidence related to transactions in which Mrs Razzi was not claimed to be involved, this development considerably reduced the ambit of the likely contest. Moreover, at about this same time, an agreement was reached between counsel for the Commissioner and counsel for Mrs Razzi for the introduction into evidence of transcripts of the numerous tape recordings upon which the Commissioner relied in support of his allegations of engagement, including his allegation against Mrs Razzi. This sensible arrangement had the effect of saving a considerable amount of time at the trial. In the event the trial occupied only four days. They were not all full days; the Court had to adjourn early on the first day because of the unavailability of a witness and the argument finished before lunch on the fourth day.

4. Mrs Razzi put in issue both her engagement in the dealing and the receipt by her of any benefit. The evidence adduced by the Commissioner was almost entirely directed to the issue of engagement; there was only brief affidavit evidence regarding property matters, out of which the Court was asked to infer benefit. Mrs Razzi gave oral evidence. That evidence was spread over parts of two hearing days. It occupied 56 pages of transcript. These pages were analysed by counsel for Mrs Razzi in his recent submissions on costs. It is impossible to be precise, because sometimes questions move from one topic to another, but it is clear that only about 10-12 pages were devoted to the issue of benefit, as distinct from that of engagement. The addresses were not transcribed; but my recollection, not contested by counsel, was that they would have been apportioned in a similar way, that is 20%-25% of the time would have been devoted to the issue of benefit, the balance to that of engagement.

5. As will be apparent, I found against Mrs Razzi on both issues. Although there was no direct evidence of benefit, I took the view that such an inference ought to be drawn from the proved facts. On appeal, the Full Court upheld my view about engagement but disagreed with my inference of benefit. Accordingly, the order against Mrs Razzi was set aside.

6. The submission put on behalf of Mrs Razzi in support of her claim for costs on a solicitor-client basis is that there was no material available to the Commissioner to justify a claim for a pecuniary penalty against Mrs Razzi and that this was (or should have been) obvious to him before he made the application, so that his claim was an abuse of process. As I commented to counsel when the submission was made, this was a bold submission to put to a judge who had held, however erroneously, that the evidence did support an inference of benefit. But, more importantly, it is not a view of the matter which would have commanded the agreement of at least two members of the Full Court. In his reasons for judgment, after dealing with the issue of engagement, Davies J. introduced the subject of benefit with the words: "The finding as to pecuniary penalty has, however, given me more trouble". Hill J. said: "Like Davies J, I find the issue of the assessment of the pecuniary penalty on the facts of the case difficult".

7. Of course, I unhesitatingly accept the view of the Full Court that the evidence did not justify the inference of benefit. But these remarks support my own opinion that the evidence did present an arguable case, even a strongly arguable case, in support of the drawing of that inference. The claim of abuse of process must be rejected. Costs should not be assessed on a solicitor-client basis.

8. I should add that, during argument on the claim for solicitor-client costs, counsel for Mrs Razzi made several references to the fact that the hearing had occupied a much lesser period of time than was originally expected. This comment was made almost by way of complaint. Its repetition puzzled me. So I asked counsel to explain the relevance of that matter, commenting that I found it difficult to see that Mrs Razzi was otherwise than advantaged by the shortening of the hearing. Although counsel did not spell out the details, I understood from his reply that some sort of agreement had been made obliging Mrs Razzi to pay "cancellation fees" in respect of some or all of the time which was originally expected to be needed for the case but which was not in fact required. I gathered that one purpose of the application for solicitor-client costs was to facilitate a claim for those fees.

9. I do not think that a solicitor-client order would in fact enable recovery of "cancellation fees". A solicitor-client costs order enables the recipient of the order to recover the actual costs, reasonably incurred, of all work reasonably required and actually performed in connection with a matter. But it does not extend to fees for work not done.

10. However, even if there was a basis for recovery of "cancellation fees", I would require a deal of persuasion ever to make an order which would have the effect of permitting a party to recover such payments from someone else. The charging of "cancellation fees" by some barristers seems to be a practice of very recent origin. In 21 years at the bar, from 1963 to 1984, I never heard of such fees being asked. There were, of course, occasions when cases were suddenly adjourned, or when they took less time than had been estimated, so that the barristers briefed in the matter found themselves unexpectedly out of court. Very often they would have refused other work because of the case and its estimated duration. But, as I understood the situation, barristers generally accepted that any financial loss caused by such circumstances was to be borne by them. Any disadvantage had to be balanced against the advantage conferred by the rule which permits barristers to charge a full fee on a matter settled after delivery of the brief but before any hearing. This approach was fair. The unexpected time out of court was rarely the personal fault of the barrister's client, or even of the opposing party. Moreover, it was right in principle. The practice of demanding "cancellation fees" can rest only on the premiss that, if a case does not proceed or finishes early, the barrister will be left without remunerative work. But, except perhaps for beginners at the bar who are unlikely in any event to be able to command a "cancellation fee", the premiss is rarely well-founded in point of fact. Most established barristers find that their problem is over-employment, not under-employment. For most, some unexpected time out of court is a welcome opportunity to catch up with chamber work.

11. At a time when legal fees are so onerous as to exclude from significant litigation all but the wealthy and the legally-aided, any new practice which further increases costs requires meticulous justification. I am not aware of any attempted justification of "cancellation fees". It seems to me that it would be desirable for Bar Councils and Law Societies to examine such fees, and perhaps issue a ruling or some guidelines, before the practice becomes firmly entrenched.

12. I turn to Mrs Razzi's alternative claim, for payment of the whole of her costs on a party-party basis. The ordinary position, of course, is that the successful party is entitled to such an order. But this is not an inflexible rule. During the course of argument both parties accepted the accuracy of the summary of principles expounded by Mahoney JA in Jamal v Secretary Department of Health (1988) 14 NSWLR 252 at pp 271-272:

"But the general rule is, of course, subject to exceptions. Those

exceptions are, inter alia, of two general kinds. First, if the costs

of the appeal have been increased by an issue on which the successful

parties failed and those costs are of sufficient significance to warrant

a special order, the party who succeeded on that issue should have the

costs of it, to be set off against the general costs of the appeal:

see, eg, Cracknall v Janson (1879) 11 Ch D 1 at 23. I do not mean by

this that, absent a special order, the ordinary discretion of a taxing

officer is restricted. And it may be of assistance to the taxing

officer to have the decision of the judge who was familiar with the

issues upon such matters.

And, secondly, there may be reasons why the general costs of the appeal

or the costs of particular issues will be ordered otherwise. Thus, for

example, the conduct of the successful respondent may have justified the

appeal being brought: see Paterson v Provost, andc, of St Andrews (1881)

6 App Cas 833 at 845 per Lord Selborne LC; or his conduct in relation to

the matter under appeal may be discreditable to an extent warranting his

being deprived of costs: see Jones v Merionethshire Permanent Benefit

Building Society (1892) 1 Ch 173 at 187-188 and Borthwick v Evening Post

(1888) 37 Ch D 449 at 465."

13. In the present case, only one member of the Full Court expressed any view about the costs of the trial. Jenkinson J. would have had the Full Court order that the Commissioner pay the whole of Mrs Razzi's trial costs. He said:

"I do not consider that in a proceeding of this kind a failure by a

defendant on an issue ought to be regarded as a ground for depriving

that defendant of an order for payment of her costs of the proceeding.

Nor in such a case should a finding of untruthful testimony by a

defendant afford such a ground, in my opinion. I would order that the

appellant's costs of the proceeding in which the orders under appeal

were made be paid by the respondent."

14. Davies and Hill JJ did not share this opinion. It was at their behest that the matter of costs was remitted to me. They did not give reasons for their view. However, they presumably thought that this was not a case in which the trial costs should necessarily follow the event of the appeal; otherwise they would have joined in the order proposed by Jenkinson J. I can only assume that they felt that Mrs Razzi's failure on the issue of engagement might properly be a basis for a less favourable order than that proposed by Jenkinson J; but that they preferred me, as the judge with knowledge of the course of the trial, to make that assessment.

15. As I have already said, counsel for Mrs Razzi asked for a full party-party order, if his request for a solicitor-client order was refused. He referred me to the view expressed by Jenkinson J. Not surprisingly, counsel relied on what Mahoney JA called "the general rule". Equally unsurprisingly, the solicitor for the Commissioner relied on Mahoney JA's exceptions. He pointed out that Mrs Razzi chose to put in contention the issue of engagement; she could have conceded that issue and argued only about benefit. She failed on engagement, an issue which depended heavily upon her own credibility. As the solicitor reminded me, I specifically held that Mrs Razzi was not to be believed and all three members of the Full Court indicated ready acceptance of that view.

16. I do not think that the mere fact that Mrs Razzi was disbelieved warrants a denial to her of her full costs, under the second exception mentioned by Mahoney JA. To take that view would be significantly to erode the general principle that a successful party is entitled to full costs. It is not unusual for a party to be disbelieved in regard to some aspect of a case and yet be ultimately successful. But I am of the opinion that this case is covered by Mahoney JA's first exception. The costs of this trial were greatly increased by Mrs Razzi's decision to contest the Commissioner's contention that she was engaged in the dealing. The matter of engagement was not something of incidental or peripheral importance, dealt with in passing whilst the Court pursued a central issue on which Mrs Razzi was successful. It was logically a separate question, tendered as a separate issue and vigorously contested by Mrs Razzi. If she had accepted the allegation of engagement, and limited herself to an argument about benefit, the hearing would have been concluded within one day. The effect of her decision to contest the issue upon which she failed was greatly to increase the Commissioner's costs. The Commissioner does not, of course, seek recovery of his increased costs. He merely says that Mrs Razzi should recover only one-half of her costs, a result which imposes upon him, in relation to her costs, a burden roughly approximating that which would have applied if the case had concluded in two days. It seems to me that this is an approach which errs, if at all, on the side of magnanimity.

17. I recognise the importance of the general principle to which Mahoney JA referred. But I do not think that courts should be reluctant to recognise the existence of exceptional cases. In these days of extensive court delays and high legal costs the courts should use all proper means to encourage parties to consider carefully what matters they will put in issue in their litigation. If parties come to realise that they will not necessarily recover the whole of their costs, even though they have unsuccessfully raised a discrete issue, they are likely better to consider whether the raising of that issue is a justifiable course to take.

18. I propose to order that the Commissioner pay one-half of the costs incurred by the respondent in connection with the trial of the matter. As the Commissioner informed Mrs Razzi's solicitors, before the remitted hearing, that he accepted such an obligation, there ought to be no costs order in connection with that hearing.

Re Commissioner of the Australian Federal Police v Carlo Razzi; Patricia Anne Razzi (Also Known As Patricia Anne Dermond); Allan Gregory Mclean and Elvio Lorenzelli [1991] FCA 267; 344 Costs 101 ALR 425 30 FCR 64 (21 June 1991)

Re Commissioner of the Australian Federal Police v Carlo Razzi; Patricia Anne Razzi

At a glance

Court

Decision date

Before

Source

Judgment (23 paragraphs)

Parties

Cases Cited (2)

Re Commissioner of the Australian Federal Police v Carlo Razzi; Patricia Anne Razzi (Also Known As Patricia Anne Dermond); Allan Gregory Mclean and Elvio Lorenzelli [1991] FCA 267; 344 Costs 101 ALR 425 30 FCR 64 (21 June 1991)