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[2003] FCA 1466
defendant. The applicants’ claims were dismissed; BP’s termination and option declarations were granted, and the applicants were ordered to pay the amounts specified in the orders and BP’s costs, including...
Hely J had to settle how BP's costs would be calculated after three related cases had moved from the NSW Supreme Court to the Federal Court. BP wanted the NSW statutory assessment process, which it expected might produce a higher figure. The judge held that the Federal Court could not send the assessment to NSW assessors under a scheme supervised by the NSW Supreme Court. Because most of the proceedings took place in the Federal Court, and one overall assessment was more efficient, the applicants were ordered to pay BP's costs for both stages, taxed under the Federal Court Rules.
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These reasons concern the final form of orders and, in particular, the method for calculating costs in three related proceedings: Ringrow Pty Ltd v BP Australia Pty Ltd, and . Hely J delivered the reasons on 15 December 2003. The judgment says the Court had already published substantive reasons on 13 November 2003, so the text available here is not a full account of the underlying disputes or the Court's reasoning on the parties' substantive claims ([1]).
4 cited instruments linked from this judgment.
The parties brought in short minutes to give effect to those earlier reasons. Two matters arose while the orders were being prepared. First, Hely J said that paragraph [171] of the earlier reasons contained an error: the intended declarations referred to paragraphs 1, 2 and 3B of the further amended cross-claims, not paragraphs 1, 2, 3A and 3B of the amended cross-claims. Second, the parties agreed that a sum referred to in paragraph [174] should be struck excluding GST ([1]). The judge recorded these corrections but identified only one remaining dispute: how the amount of costs should be determined if the parties could not agree ([2]).
BP sought costs of the Federal Court proceedings and the earlier NSW Supreme Court proceedings. Its primary proposal was an amount agreed by the parties or, failing agreement, assessed by a suitably qualified costs assessor. As an alternative, it sought a direction that a Federal Court taxing officer apply the prescriptions in ss 208F and 208G of the Legal Profession Act 1987 (NSW) (LPA). Another alternative was for the NSW Supreme Court to determine the costs of the proceedings before it. The applicants' position was that the Supreme Court costs should be assessed there and the Federal Court costs taxed under the Federal Court Rules ([3]).
Hely J ordered one costs-quantification process. The applicants were to pay BP's costs of the proceedings, including those incurred while the cases were in the NSW Supreme Court, with the costs to be taxed under the Federal Court Rules ([14]). The formal orders also included payment of specified sums for liquidated damages, costs and expenses incurred before the proceedings, and interest. Those amounts varied between the three matters. The substantive declarations concerning termination of BP site agreements and exercise of land-purchase options appear in the orders, but the reasons reproduced here do not explain the factual or legal reasoning behind those declarations.
The Court began with its own costs framework. Section 43 of the Federal Court of Australia Act 1976 (Cth) gave the Federal Court a general discretion to make costs orders. Under Federal Court Rules O 62 r 4(1), a person awarded costs was entitled to taxed costs unless the Court ordered otherwise. A Registrar or Deputy Registrar ordinarily acted as taxing officer, and the costs rules provided for consideration of costs that appeared necessary or proper ([4]).
The Court could make a different order about quantification. O 62 r 4(2) allowed the Court to order, among other options, that costs be ascertained in a manner directed by the Court. O 62 r 5 addressed costs from proceedings in another court that had been transferred or removed into the Federal Court. It allowed the Federal Court to specify the costs, direct that they be taxed under the Federal Court Rules, or arrange for taxation or another method in the other court ([5]).
The NSW scheme was materially different in its machinery. Hely J described the LPA as providing for assessment of a fair and reasonable amount of costs. The assessor was to consider whether it was reasonable to carry out the work and what amount was fair and reasonable for that work. The LPA also specified considerations relevant to the amount ([7]). An application was made to the Manager, Costs Assessment, who referred it to a costs assessor. The assessor issued a certificate setting out the determination ([8]). The judgment also summarises review mechanisms: review by a panel of assessors, an appeal to the NSW Supreme Court on a question of law, and an appeal to that Court by leave ([9]).
The key obstacle to BP's preferred process was not simply the text of the Federal Court Rules. It was the institutional structure of the NSW scheme. Hely J held that the LPA mechanisms operated under the umbrella of the NSW Supreme Court. The Federal Court could not effectively require NSW assessment personnel to determine the amount payable under a Federal Court costs order, particularly when the Federal Court would have no supervisory jurisdiction over that assessment ([10]). The judgment therefore rejects the idea that the Federal Court could use the NSW statutory assessment system as the process for quantifying costs payable under its own order.
Hely J also considered BP's argument that the LPA approach could produce a substantially larger recovery. BP's evidence put its actual costs at $988,355.50 and estimated that Federal Court taxation might yield about $497,000, compared with an amount of about $741,000 under the LPA process ([11]). The judge noted that the reason for the projected difference had not been explained. He was also unsure whether O 62 r 4(2)(d) or r 12 empowered the Court to replace the Federal Rules' necessary-or-proper approach with the LPA's fair-and-reasonable standard, or whether any practical difference followed from choosing one standard rather than the other ([11]). The Court did not need to answer those questions because it found BP's reasons insufficient to justify departing from the ordinary rules.
Two case-specific considerations were central to that conclusion. The proceedings had been transferred to the Federal Court on BP's motion, and by far the greater part of the proceedings took place there ([13]). The judge also considered it inefficient to require two distinct quantification processes, one in each court. O 62 r 5(b) provided a route for a single taxation under the Federal Court Rules ([14]). The outcome followed from the Court's view of its own procedural rules, the limits of its supervisory authority, the history of the transfer, and the practical advantage of one assessment process.
The judgment describes the applicable costs frameworks as they stood in 2003. In the Federal Court, s 43 of the Federal Court of Australia Act 1976 (Cth) supplied the general costs discretion. O 62 established the ordinary entitlement to taxed costs and the role of the taxing officer, while O 62 r 5 provided options for costs arising in another court in a transferred proceeding ([4]-[5]).
For NSW costs assessments, the judgment describes s 76 of the Supreme Court Act 1970 (NSW) as placing costs within the Supreme Court's discretion. It also explains that the NSW Supreme Court Rules provided for assessed costs and that party-and-party costs were defined by reference to Division 6 of Part II of the LPA ([6]). Under that legislation, the relevant standard was described as fair and reasonable, with specified considerations for assessors and statutory review mechanisms ([7]-[9]).
The decision's practical clarification is narrower than a general comparison of those systems. It establishes, for the question before Hely J, that the Federal Court would not consign NSW assessment personnel to quantify costs payable under a Federal Court order where the Federal Court would lack supervision over the assessment ([10]). It also confirms that O 62 r 5(b) could be used to have costs from the earlier NSW stage taxed under the Federal Court Rules, avoiding separate processes ([14]).
The reasons do not determine whether the Federal Court could, in another procedural setting, direct a Federal Court taxing officer to apply the LPA's substantive assessment standard. Hely J expressly left uncertainty about the reach of O 62 rr 4(2)(d) and 12 and about the practical difference between the LPA and Federal Court standards ([11]). Nor does the judgment provide a general rule for every transferred proceeding. Its reasoning depends in part on the particular procedural history: transfer on BP's motion and the fact that the greater part of the proceedings occurred in the Federal Court ([13]).
The material supplied contains no later judgments discussing or applying this decision. Accordingly, no account of subsequent treatment, endorsement, limitation or departure can be established from this source alone.
At [10], Hely J stated: “This Court would have no supervisory jurisdiction in relation to an assessment of costs under the LPA.” In plain English, the Federal Court could not order costs to be assessed through a system whose assessment and review structure belonged to the NSW courts, while having no authority to supervise how that assessment was carried out.
At [11], the judge noted uncertainty about whether the Federal Court Rules enabled the Court to substitute the LPA's “fair and reasonable” standard for the Federal Rules' “necessary or proper” standard. He also said the practical difference between the tests was unclear on the evidence. This is important because the Court did not announce that the standards were identical or settle the scope of the Federal Court's power. It identified those matters as uncertain and resolved the application on other grounds.
At [13], the judge said that the proceedings were transferred to the Federal Court on BP's motion and that “by far the greater part” of them took place there. This explains why the Court did not treat the earlier NSW stage as requiring a separate costs regime. It was a fact-specific reason for applying the Federal Court's ordinary rules to the proceedings overall.
At [14], Hely J stated: “In the interests of efficiency, there should be only one quantification exercise.” In plain English, the Court considered it preferable to calculate the costs of both stages through one process rather than send one part of the costs to the NSW Supreme Court and another part through Federal Court taxation. O 62 r 5(b) provided the procedural mechanism for that result.
The reasoning is most directly relevant to costs disputes where proceedings have been transferred from another Australian court to the Federal Court, and a party asks the Federal Court to order costs from both stages. It is particularly relevant where one proposed method depends on another court's statutory costs-assessment system and that system is supervised by that other court ([10]).
The decision also speaks to situations where the parties propose separate costs processes for different stages of the same case. Hely J preferred a single quantification process in these proceedings, relying on O 62 r 5(b) and the interest in efficiency ([14]). The factual weight given to the transfer and the location of most of the proceedings is apparent from [13]. A case with a different transfer history, a different balance of work between courts, or a different statutory assessment structure may raise different considerations. The judgment does not prescribe how those differences would be resolved.
The decision should not be read, on this text alone, as holding that the Federal Court can never adopt a costs-assessment standard found in another jurisdiction's legislation. Hely J specifically expressed uncertainty about whether the Federal Court Rules enabled substitution of the LPA standard ([11]). The firmer holding concerns the inability to direct NSW assessment personnel to conduct an assessment under the NSW system when the Federal Court would not supervise that process ([10]).
Nor does this judgment, as supplied, provide a basis for applying its reasoning to the underlying service-station agreements or land options. Those subjects appear in the formal declarations, but the reasons considered here concern costs only. The substantive reasons of 13 November 2003 are referenced but are not reproduced.
The supplied judgment contains no later cases and does not report any subsequent judicial treatment. Its “precedentRelationships” are therefore not identifiable from the available material. There is no source-grounded basis here to say whether later courts followed, distinguished, applied or criticised the decision.
The judgment itself cites no other cases in the reasons reproduced. Its analysis relies on statutory and procedural provisions: s 43 of the Federal Court of Australia Act 1976 (Cth), the Federal Court Rules O 62, s 76 of the Supreme Court Act 1970 (NSW), the NSW Supreme Court Rules and the LPA ([4]-[9]). Any research into later treatment would need sources beyond the text supplied; this deep dive does not infer that treatment.
Several matters are expressly left unresolved. First, Hely J was unsure whether O 62 r 4(2)(d) and r 12 permitted the Federal Court to apply the LPA's fair-and-reasonable standard instead of the Federal Rules' necessary-or-proper standard ([11]). The Court did not decide that point, because BP's grounds for seeking a departure from the ordinary rules were insufficient ([12]-[13]).
Second, the judgment does not explain why BP's evidence forecast a substantial difference between the two costs outcomes. The judge recorded the estimates, approximately $497,000 under Federal Court taxation and approximately $741,000 under the LPA process, but noted that the cause of the difference had not been explained ([11]). The reasons therefore do not establish which categories of work, rates or assessment methods produced the projected gap.
Third, the decision does not state how the result would differ if most proceedings had taken place in the original court, if the transfer had occurred at another party's request, or if the other court's assessment process had a different supervisory arrangement. Hely J relied on the actual transfer history and the predominance of Federal Court proceedings in rejecting BP's request ([13]).
Finally, the text does not contain the substantive reasons published on 13 November 2003. Although the formal orders state that BP's termination notices were valid and effective, that options to purchase were validly exercised, and that specified amounts were payable, this costs judgment does not explain the reasoning behind those substantive outcomes. Any analysis of the underlying contractual issues would require that earlier judgment.
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Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
N 279 OF 2003 BETWEEN: ULTIMATE FUEL PTY LTD
CROSS-CLAIMANT AND: ULTIMATE FUEL PTY LIMITED
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
THE COURT DECLARES THAT: 1. The Cross-Claimant/Respondent's Notice of Termination dated 2 December 2002 in respect of the BP Privately Owned Sites Agreement dated 5 July 2000 in relation to a BP branded service station at the corner of Egerton Street and Silverwater Road, Silverwater is valid and effective. 2. The BP Privately Owned Sites Agreement dated 5 July 2000 in relation to a BP branded service station at the corner of Egerton Street and Silverwater Road, Silverwater was validly terminated by the Cross-Claimant/Respondent on 2 December 2002. 3. The option to purchase the land described as Folio Identifiers 1/135372 and 2/312252 and known as corner of Egerton Street and Silverwater Road, Silverwater was validly exercised by the Cross-Claimant/Respondent on 19 June 2003 pursuant to the Option Deed dated 30 June 2000. 5. The Applicant/Cross-Respondent is liable to pay to the Cross-Claimant/Respondent the sum of $36,248.23 pursuant to clauses A14.2(f) and A16.9 of the BP Privately Owned Sites Agreement dated 5 July 2000 in relation to a BP branded service station at the corner of Egerton Street and Silverwater Road, Silverwater. THE COURT ORDERS THAT: 1. The Third Further Amended Statement of Claim is dismissed. 2. The parties are released from the undertakings given to the Supreme Court of New South Wales on 10 January 2003 and the agreements made on that day by the parties and noted by the Supreme Court of New South Wales are discharged. 3. The Applicant/Cross-Respondent pay to the Cross-Claimant/Respondent: (a) the sum of $36,248.23 for costs and expenses incurred by the Cross-Claimant/Respondent prior to the commencement of proceedings; (b) interest on the amount in paragraph 3(a) in the sum of $3,493.23; and (c) the Cross-Claimant/Respondent's costs of the proceedings (including the costs of the proceedings whilst in the Supreme Court of New South Wales), including any reserved costs. 4. The parties have liberty to apply on three days notice. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
APPLICANT AND: BP AUSTRALIA PTY LTD
RESPONDENT BETWEEN: BP AUSTRALIA PTY LTD
CROSS-CLAIMANT AND: RINGROW PTY LTD
CROSS-RESPONDENT N 279 OF 2003 BETWEEN: ULTIMATE FUEL PTY LTD
APPLICANT AND: BP AUSTRALIA PTY LTD
RESPONDENT BETWEEN: BP AUSTRALIA PTY LTD
CROSS-CLAIMANT AND: ULTIMATE FUEL PTY LTD
N 280 OF 2003 BETWEEN: NADER-ONE PTY LTD
APPLICANT AND: BP AUSTRALIA PTY LTD
RESPONDENT BETWEEN: BP AUSTRALIA PTY LTD
CROSS-CLAIMANT AND: NADER-ONE PTY LTD
DATE: 15 DECEMBER 2003 PLACE: SYDNEY
REASONS FOR JUDGMENT 1 The parties have now brought in short minutes of order to give effect to the reasons for decision which I published on 13 November 2003. There are two matters which emerged in the process of preparation of those short minutes which I should record. First, there is an error in par [171] of the reasons. I intended to make declarations in terms of pars 1, 2 and 3B of the further amended cross claims, rather than pars 1, 2, 3A and 3B of the amended cross claims. The reasons for judgment should be corrected in that respect. Second, in par [174] of the reasons I referred to a sum of $119,619.14 (including GST). The parties have now agreed that the appropriate sum is one which is struck excluding GST, and the short minutes of order have been prepared on that basis. 2 The only issue remaining in dispute is costs, or more precisely, the manner in which the quantum of costs should be determined in default of agreement. 3 BP seeks orders that the applicant in each proceeding pay BP's costs (including the costs of the Supreme Court of NSW proceedings) in an amount to be agreed, or in default of an agreement, in an amount to be determined by a suitably qualified costs assessor. Alternatively, BP seeks a direction pursuant to Order 62 r 12 of the Federal Court Rules (if the costs of both the Federal Court proceedings and the Supreme Court proceedings are to be taxed in this Court) requiring the taxing officer to assess costs in accordance with the prescriptions contained in s 208F and s 208G of the Legal Profession Act 1987 (NSW) ('LPA'). In the alternative to each of the foregoing BP seeks an order pursuant to Order 62 r 5 that the costs of the Supreme Court proceedings be determined by the Supreme Court. The applicants' position is that the costs of the Supreme Court proceedings should be assessed in that Court, and that the costs of the Federal Court proceedings should be taxed in accordance with the Rules of this Court. 4 The power of the Federal Court in respect of costs arises by operation of s 43 of the Federal Court of Australia Act 1976 (Cth) which confers on the Court a general discretion to make an award of costs. Order 62 r 4(1) provides that where costs are to be paid to a person by or under an order of the Court, that person is entitled to his/her taxed costs. Unless otherwise ordered, bills of costs are to be taxed, allowed and certified by a Registrar or Deputy Registrar as taxing officer: Order 62 r 39, O 62 r 8. On a taxation, fees are to be allowed in accordance with the second schedule unless otherwise ordered: Order 62 r 12. Other fees are in the discretion of the taxing officer, which is to be exercised having regard to the factors specified in Order 62 r 22. Costs charges and expenses which appear to the taxing officer to be 'necessary or proper' are to be allowed: O 62 r 19. 'Necessary or proper' is the phrase often used where costs are taxed on a party/party basis. 5 Order 62 r 4 provides: '(2) Where the Court orders that costs be paid to any person, the Court may further order that as to the whole or any part of the costs specified in the order, instead of taxed costs, that person shall be entitled to - (a) a proportion specified in the order of the taxed costs; or (b) the taxed costs from or up to a stage of the proceedings specified in the order; or (c) a gross sum specified in the order; or (d) a sum in respect of costs to be ascertained in such manner as the Court may direct.' Order 62 r 5 provides: 'Costs in other Courts 5 Where in a proceeding transferred to or removed into the Court or in a proceeding on an appeal to the Court, the Court makes an order as to the costs of a proceedings before any other court, the Court may - (a) specify the amount of the costs to be allowed; (b) order that the costs be taxed in accordance with this Order; or (c) make orders for the ascertainment of the costs by taxation or otherwise in that other court.' 6 In the Supreme Court, s 76 of the Supreme Court Act 1970 (NSW) provides that costs shall be in the discretion of the Court. The Court may order costs to be assessed on the basis set out in Division 6 of Part II of the LPA. Part 52A r 6 of the Supreme Court Rules now provides (ie since 1 July 1994) that where costs are to be paid to a person, that person is entitled to assessed costs. Costs are ordinarily payable on a party/party basis (Order 51A r 32), which is now defined to mean the basis of assessment set out in Division 6 of Part II of the LPA: Order 52A r 2. 7 Division 6 of Part II of the LPA includes s 208F and 208G. In general terms, those sections provide for an assessment of costs which is 'fair and reasonable' in amount. The assessor must consider whether or not it was reasonable to carry out the work to which the costs relate, and what is a fair and reasonable amount of costs for the work concerned: LPA s 208F. The LPA s 208G lists matters to which the assessor is to have regard in assessing what is a fair and reasonable amount of costs. 8 As a matter of mechanics, an application for assessment of party/party costs under the LPA is made to the Manager, Costs Assessment (LPA s 202) who refers the matter to a costs assessor (s 206). The Manager, Costs Assessment is defined as a person holding office under Part 2 of the Public Sector Management Act 1988 (NSW) as 'Manager, Costs Assessment, in the (NSW) Attorney General's Department'. The costs assessor issues a certificate that sets out his determination (s 208J). 9 The mechanisms for the review of costs assessment are contained in subdivisions 4A and 4B of Part II, Division 6 of the LPA. In essence, the Act provides for three avenues for the review of a costs assessment: - review by a panel comprising two costs assessors pursuant to s 208KA; - appeal to the Supreme Court of NSW pursuant to s 208L on a question of law; and - appeal to the Supreme Court of NSW pursuant to s 208M by leave. 10 The provisions of Division 6 of Part II of the LPA operate under the umbrella of the NSW Supreme Court. Notwithstanding the generality of the expressions used in Order 62 r 4(d) of the Federal Court Rules, I am not entitled effectively to conscript those engaged in the NSW system of costs assessment to assess the quantum of costs payable pursuant to an order of this Court, nor is it appropriate that I should do so. This Court would have no supervisory jurisdiction in relation to an assessment of costs under the LPA. 11 Order 62 r 4(2)(d) permits the Court to make an order for costs to be ascertained in such manner as the Court may direct. Order 62 r 12 contemplates that an order may be made modifying or displacing the provisions of the second schedule. I am not sure that either of those provisions would enable me to substitute the 'fair and reasonable' standard employed in Part II Division 6 of the LPA for the 'necessary and proper' standard in Order 62 r 19. Nor is it clear to me what the practical difference (if any) results from the adoption of one test in preference to the other. I do have evidence that if BP's actual costs of the proceedings are $988,355.50, BP could expect to tax its costs pursuant to the Federal Court Rules at about $497,000, but would be likely to recover an amount of about $741,000 under an assessment pursuant to Part II of the LPA. Why a difference of this order would be likely to arise has not been explained. 12 BP seeks an order that its costs be taxed in accordance with the prescriptions contained in accordance with s 208F and s 208G of the LPA because such a taxation is likely to produce a greater costs recovery, and because the proceedings were commenced in the Supreme Court and only transferred into this Court because of exclusive dealings which the applicants later abandoned. 13 In my view, those matters provide an insufficient foundation for departing from the ordinary operation of the rules in relation to costs. The proceedings were transferred into this Court on BP's motion, and by far the greater part of the proceedings occurred in this Court. 14 Nor do I consider it to be appropriate that there should be an assessment of the costs in the Supreme Court and a taxation of costs in this Court. In the interests of efficiency, there should be only one quantification exercise. Order 62 r 5(b) allows for that to occur. In their written submissions, the applicants withdrew a submission made 'on the run' that this should occur. To the extent necessary, leave to withdraw that submission should be given, but I would not have acceded to it in any event. The proper order is that the applicants pay BP's costs of the proceedings, including costs incurred whilst the proceedings were in the Supreme Court. That will have the effect of entitling BP to receive its taxed costs of the proceedings: Order 62 r 4. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hely.
Solicitor for the Applicants: Stojanovic Solicitors
Solicitor for the Respondent: Corrs Chambers Westgarth Lawyers
Ringrow Pty Ltd
BP Australia Pty Ltd
The applicants’ claims were dismissed; BP’s termination and option declarations were granted, and the applicants were ordered to pay the amounts specified in the orders and BP’s costs, including costs incurred in the NSW Supreme Court.