Sackl v Auslink Investment Co. Associates Pty Ltd

Consideration 9 In Paciocco v Australia and New Zealand Banking Group Limited (No 2) [2017] FCAFC 146; (2017) 253 FCR 403 (Paciocco) at [13]-[20], the Full Court (Allsop CJ, Besanko and Middleton JJ) set out the principles to be applied in relation to the decision whether to make a lump sum costs order as follows: [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. 10 The challenge to the lump sum order is based primarily on the amount sought. This in turn is based on what are said to be deficiencies in the evidence relied on, such as the amount sought not being able to be established as appropriate in the circumstances. I do not accept Mr Sackl's submission that if the order he seeks is made, the matter is unlikely to go to taxation. 11 On the other hand, Auslink does not address what is said by Mr Sackl to be deficiencies in the evidence, save for submitting that the criticisms are unfounded. In this context Auslink submitted that the nature of the exercise is a broad brush one, citing Billingsley v Napoli at [85(4)]-[85(5)] which is as follows: [85] In relation to the discretion to make costs orders on a lump sum basis: … (4) The approach to be taken by the Court in deciding whether to make such an order and in arriving at the quantum thereof should be a broad brush approach. It is one of estimation or assessment and not of arithmetic. The Court should avoid, in effect, carrying out a taxation under the guise of performing a lump sum costs assessment: Bayley & Associates at [17(e)]; Ginos Engineers Pty Ltd v Autodesk Australia Pty Ltd [2008] FCA 1051; (2008) 249 ALR 371 at [23] (Finn J); Sony Entertainment (Australia) Limited v Smith [2005] FCA 228; (2005) 215 ALR 788 at [197]-[200] (Jacobson J). That would defeat the entire purpose of the lump sum costs procedure as set out in the Costs Practice Note: Coshott v Burke (No 2) [2018] FCAFC 81 (Coshott v Burke (No 2)) at [27] (Logan, Kerr and Farrell JJ); (5) In assessing quantum the Court is entitled to take into account the evidence that is before it, its own observations of the proceeding and the Judge's own experience: see Innes v AAL Aviation Limited (No 2) [2018] FCAFC 130 [18] (Tracey, Bromberg and White JJ). The evidence of an expert costs assessor is both relevant to and probative of whether a lump sum costs order ought to be made and the quantum of any such order: Bayley & Associates at [17(g)] 12 This matter has a history although it is not clear what the relevance is of the preceding judgments which are annexed to the affidavit of Shenghai Mo affirmed 8 March 2022. The costs relate to these proceedings. I accept there ought not to be any unnecessary delay. That said, there are issues that have been pointed to as to the sufficiency of the evidence which are not simply addressed by Auslink's submission that this assessment is a broad brush exercise. Moreover, Auslink relies on evidence which claims an entitlement to $56,855.50 which includes GST, only to concede in written submissions that the GST is not recoverable. That is, the affidavit on which it relies, on its own submission, contains an error as to the amount claimed. The draft orders sought reflect the error. Furthermore, it is difficult to see why an order that costs be agreed or assessed would cause significant delay. 13 Considering the relevant principles, the submissions and the material relied on in this application, I am not prepared to make the order sought by the first respondent. Rather, in the circumstances, the appellant should pay the costs of the first respondent to be agreed or taxed.

Conclusion 14 The order for costs in favour of the first respondent is to be agreed or taxed. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Abraham.