Simplot Australia Pty Limited v Commissioner of Taxation

1. The respondent bear his own costs of and incidental to: (a) the preparation of the report of Mr Mark Field dated 19 August 2022, and (b) the case management hearing of 20 March 2023.
2. The applicant pay the respondent's costs of and incidental to Mr Field's attendance to give evidence as a witness at the hearing.
3. The applicant otherwise pay the respondent's costs of the proceeding. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background 1 Judgment in this matter was delivered on 22 September 2023: Simplot Australia v Commissioner of Taxation [2023] FCA 1115 (the Judgment). The Court ordered that: (a) The application be dismissed. (b) Unless either party applies within seven (7) days for a different order as to costs, the applicant pay the respondent's costs to be taxed if not agreed. 2 By an application dated 29 September 2023, Simplot Australia Pty Ltd applied for a different costs order, seeking an order that the Commissioner of Taxation pay his own costs in relation to the expert report of Mr Field, relying upon rule 40.06 of the Federal Court Rules 2011 (Cth) which provides that a party may apply to the Court for an order "that any costs that have been improperly, unreasonably or negligently incurred be disallowed". 3 Simplot had objected to Mr Field's evidence on the basis "of its relevance and/or that the report was not wholly or substantially based on specialised knowledge". The Court found that Mr Field's evidence rose no higher than lay evidence of his observations of the product packaging, that the questions asked of Mr Field did not reflect the statutory scheme and the opinions expressed by Mr Field were not based on his expertise. 4 The Commissioner submits that costs should follow the event, and that no exception should be made in relation to Mr Field's report. The Commissioner disputes that the preparation and reliance on Mr Field's report was "improper, unreasonable or negligent" but was a legitimate forensic choice of the Commissioner. It was a foreseeable consequence of Simplot instituting proceedings that the Commissioner may adduce expert evidence and, if Simplot were unsuccessful, it may bear the cost of this evidence. Simplot itself had accepted that Mr Field's evidence as to the marketing of the products was relevant. 5 The Court is satisfied that the costs of preparing Mr Field's report were not reasonable. There was nothing unreasonable about the Commissioner speaking with an expert in the context of a GST dispute but having done so, it ought to have been apparent that the approach he adopted to respond to the questions asked of him would not involve the application of his specialised knowledge. 6 In the event that the Court rejects the Commissioner's principal contention, the Commissioner submits that in the alternative Simplot should at least pay the Commissioner's "costs of and incidental to Mr Field's attendance to give evidence". Simplot had required Mr Field to attend for cross-examination but did not ask Mr Field any questions. The costs of Mr Field's attendance at hearing therefore could have been avoided if Simplot had provided advance notice that Mr Field was not required for cross-examination. 7 Having regard to the overarching obligation of a party to conduct litigation as efficiently as possible (ss 37M and 37N of the Federal Court Act 1976 (Cth)), Simplot should have known by no later than the day before the hearing that it did not require Mr Field for cross-examination and ought to have provided advance notice to the respondent accordingly. In those circumstances, Simplot ought to bear the costs of and incidental to Mr Field's attendance to give evidence. 8 There will be orders accordingly. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Hespe.