TFM Epping Land Pty Ltd v Decon Australia Pty Ltd

Decon's evidence of quantification of its costs 6 Decon relies on an affidavit affirmed by Timothy John Coleman, a partner of Piper Alderman, its solicitors. Mr Coleman's affidavit is expressed to be a costs summary provided in accordance with the 2 June Orders, and, I infer, in accordance with the Court's Costs Practice Note (GPN-Costs) (Costs PN). 7 As noted above, Decon seeks a lump sum costs order in the sum of $27,492 excluding GST, made up of solicitors' fees of $8,112 and disbursements comprising junior counsel's fees of $5,880 and senior counsel's fees of $13,500. 8 Mr Coleman sets out a summary of the categories of work performed including an estimate, in percentage terms, of the proportion that each category constitutes of the total amount claimed. Mr Coleman also sets out a summary in respect of each solicitor who performed the work the subject of the claim by reference to their respective hourly rates, the total hours worked, the total charges made and the percentage claimed for each solicitor of the lump sum. In addition Mr Coleman annexes to his affidavit a narrative of the work undertaken by each solicitor and copies of the invoices issued by counsel briefed to appear in the matter. 9 Mr Coleman notes that his hourly rate has been reduced from $670 per hour to $650 per hour in order to comply with the Court's scale in Sch 3 to the Federal Court Rules 2011 (Cth) and that senior counsel's fees have been reduced so that they come within the National Guide to Counsel Fees. Counsel fees constitute approximately 70% of the amount claimed.

parties' submissions 10 Decon submits that the appropriate lump sum for its costs is $27,492 excluding GST and that those costs are reasonable. 11 To the extent that an issue may arise as to whether Decon's costs of 2 June 2020, the proposed second day of the hearing, are "costs thrown away by reason of the adjournment", Decon submits that the proceeding had been set down for hearing with an estimate of two days since 21 February 2020 and at no time did the plaintiffs assert that it would take less than two days. Decon says that once it was set down its counsel set aside those two days. Decon observes, and it is not in dispute, that the plaintiffs did not notify Decon of the adjournment application until the evening before the hearing. Decon says that the following then occurred: (1) on 1 June 2020, when the adjournment application was made, it was required to appear; (2) on 1 June 2020, the Court adjourned the proceeding to the following day to allow the plaintiffs to make inquiries as to when the New South Wales Court of Appeal could hear their application for leave to appeal and appeal (Appeal Proceeding) and the Court indicated that if the appeal could not be heard within two weeks a further adjournment may not be granted, with the implication that the matter would proceed on 2 June 2020; and (3) upon hearing on 2 June 2020 that the Appeal Proceeding could be heard on 16 June 2020, the Court adjourned the hearing to 24 June 2020. 12 Decon submits that given that chain of events it is evident that it was required to appear on both days that had been scheduled for the hearing such that its counsel were prevented from taking new work on those days and it was liable for those costs. In those circumstances Decon contends that it is appropriate that any order to pay costs thrown away encompasses both days. 13 The plaintiffs submit that the Court should not make an order in the amount sought by Decon and that Decon's application for a lump sum costs order should be dismissed and an order made against it for their costs of the application. This is because: (1) Decon's claim is an ambit claim in which it has failed to separate out costs thrown away from other costs. The plaintiffs contend that a review of Decon's evidence shows that a substantial portion of its claim comprises costs that were not thrown away; and (2) there is insufficient evidence to establish "the extent to which the costs actually incurred would likely be allowed on a party-party assessment of costs", referring to Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd (No 3) [2018] NSWCA 50 at [9]. 14 The plaintiffs submit that Decon is entitled to its costs thrown away on an ordinary basis and that Decon's evidence and submissions do not grapple with the limitations on its entitlement. They contend that: (1) Decon seeks counsel fees for the whole of 2 June 2020, the second day of the hearing, which are not costs thrown away by reason of the adjournment because the parties returned on 2 June 2020 substantially because Decon's senior counsel requested, and the Court agreed, that the parties should deal with objections. The plaintiffs note that upon commencement of the hearing, Decon's senior counsel indicated that he now thought it was appropriate to defer consideration of the objections, a view which was not communicated to the plaintiffs prior to the hearing. The plaintiffs say that if the only issue to be dealt with was the fixing of the hearing date for the resumed hearing, that could easily have been dealt with in chambers without the need for an appearance; (2) even if some of the costs incurred on 2 June 2020 are costs thrown away, there is no basis for awarding the entirety of the costs of that day. The plaintiffs say that the hearing was complete by approximately 10.30 am, no substantial preparation time could have been incurred for that day, objections had been allocated to Decon's junior counsel and, in any event, work on objections is not costs thrown away; (3) there is no evidence that Decon's counsel were prevented from taking new work on 1 and 2 June 2020 nor is there evidence that Decon's legal representatives solely worked on the adjourned application on 2 June 2020 and, if they did, it can only be because they were preparing for the resumed hearing which would not be costs thrown away; (4) insofar as Decon contends that "at no time did the plaintiffs assert that [the hearing] would take less than the two days allocated", the plaintiffs say that on the morning of 1 June 2020 Decon's counsel informed the Court and the plaintiffs that Decon did not require the plaintiffs' witnesses for cross-examination and, in that context, one day was likely to be sufficient. The plaintiffs say that submission was made without notice to them, they had previously been informed that their witnesses were required for cross-examination and, in those circumstances, it is difficult to see how the plaintiffs can be criticised for not communicating a revised hearing estimate; (5) Decon seeks counsel fees for the whole of 1 June 2020 but on that day the hearing was completed by approximately 12.30 pm. There is no evidence that Decon's legal representatives were prevented from taking on further work that day and did not in fact do so. The plaintiffs note that the Court is aware from the record of communications with it that further work was done by Decon on the afternoon of 1 June 2020 on objections, which is not costs thrown away; (6) Decon seeks one hour (per counsel) of costs incurred on 31 May 2020 but the evidence does not establish that its senior counsel did one hour of work on 31 May 2020 on the adjournment application. The plaintiffs note that each of senior and junior counsel claim time for reviewing an affidavit relating to the adjournment on 31 May 2020 but no affidavit relating to the adjournment was served on that day; (7) the timesheet provided for Decon's solicitors does not address itself to costs thrown away nor to the reasonableness of the costs incurred; (8) the ambit nature of Decon's claim is evidenced by its own documents. The plaintiffs note that on the morning of 2 June 2020, before the hearing, Decon sent them a request for payment of costs thrown away, which calculated those costs at $32,017, while now the claim is for $27,492; and (9) Decon does not adduce evidence which would give the Court comfort that the amount it seeks reflects the amount it would obtain on an assessment. The plaintiffs note that there is no opinion evidence identifying what a likely assessed amount would be. Rather Decon's submissions assume that, on assessment, it would receive 100% of its counsels' and solicitors' fees reduced only so far as its counsel have charged above the National Guide to Counsel Fees and its solicitors have charged above the Court's scale. The plaintiffs submit that nothing in the evidence makes that assumption good.

consideration 15 The application before me is for quantification of the costs order made in Decon's favour on 2 June 2020. That is, having already determined that Decon is entitled to its costs thrown away by reason of the adjournment of the hearing on a lump sum basis and payable forthwith, the only task that remains is quantification of those costs. 16 Two principal issues arise in relation to the claim made by Decon for an order that its costs be quantified in the sum of $27,492: first, whether all of the costs it has claimed can properly be categorised as costs thrown away; and secondly, whether the claim by Decon for all of its costs without, it seems, applying any discount to reflect that it is only entitled to its party/party costs, means that the Court is unable properly to quantify the costs payable. 17 Before dealing with those issues it is convenient to set out some general principles in relation to the philosophy behind, and the approach to, lump sum costs orders. 18 The purpose of a lump sum costs order is "to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation": Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 (Beach Petroleum) at 120. The starting point for the fixing of costs is the charges rendered by the applicant's solicitors: Beach Petroleum at 124. 19 In Hudson v Sigalla (No 2) [2017] FCA 339 at [21]-[22] Katzmann J provided the following summary of the principles guiding the exercise of the discretion to award costs in a lump sum: 21 The Court's power to make a costs order in a specified sum is provided for expressly in s 43(3)(d) of the Act and r 40.02(b) of the Rules. The purpose of such a rule is "to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation": Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 120 citing Leary v Leary [1987] 1 WLR 72; [1987] 1 All ER 261. 22 Some of the relevant principles informing the exercise of the discretion were helpfully summarised by Sackville J in Seven Network Ltd v News Ltd [2007] FCA 2059 at [25]-[30], a case decided under the former Rules of Court. In substance they are as follows: (1) The sum is to be "fixed broadly having regard to the information before the Court" (Beach Petroleum at 124) and "a much broader brush [is to be applied] than would be applied on taxation" (Hadid v Lenfest Communications Inc [2000] FCA 628 at [35]; Harrison v Schipp (2002) 54 NSWLR 738 at [22] per Giles JA). (2) The principles applicable on taxation and the costs allowable on taxation may nonetheless assist the Court in fixing an appropriate sum, but "care should be taken … to ensure that the process does not take on too many of the characteristics of a taxation": Seven Network at [30]. (3) The approach to be taken must be "logical, fair and reasonable": Beach Petroleum at 123, cited in Hadid at [27]; Harrison at [22]. (4) The Court should be astute to avoid overestimating the recoverable costs and underestimating the appropriate amount such as by applying an arbitrary discount: Beach Petroleum at 123. 20 In Fewin Pty Ltd v Burke (No 3) [2017] FCA 693 at [61] I observed that "[i]n 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", citing Bobb v Wombat Securities Pty Ltd (No 2) [2013] NSWSC 863 at [10]. 21 In South Western Sydney Local Health District v Gould (No 2) [2018] NSWCA 160 (Gould (No 2)) at [10]-[12] Basten JA said in relation to an application for a gross sum costs order made pursuant to s 98(4) of the Civil Procedure Act 2005 (NSW) in circumstances where the evidence of quantum of the costs claimed was comprised in one paragraph of a solicitor's affidavit: 10. Thus the $90,000 sought reflects slightly more than 60% of the appellant's actual costs and disbursements incurred at first instance. There is no evidence as to the likely amount of costs which would be recovered on assessment. There is no evidence to disclose which costs were incurred before 25 May 2015 and which costs were incurred after. There is no evidence of the hourly rates charged by solicitors or counsel. There is no evidence as to what the disbursements were. There is also no evidence to suggest that the process of assessment would be unusually arduous or time consuming or expensive. Indeed, the motion sought the same amount, whether or not the proposed indemnity costs order were to be made. 11. In Colquhoun v District Court of New South Wales (No 2) [2015] NSWCA 54 there was substantially the same dearth of evidence. This Court said at [6]-[7]: "The power to make a lump sum costs order 'should only be exercised when the Court considers that it can do so fairly between the parties, and that includes sufficient confidence in arriving at an appropriate sum on the materials available': Harrison v Schipp [2002] NSWCA 213; 54 NSWLR 738 at [22]; Hamod v State of New South Wales [2011] NSWCA 375 at [813]. The material supplied by the Secretary, which is a bare statement of total costs and disbursements, does not permit the Court to have any confidence that $22,000 (or some other amount) is an appropriate sum. The evidence is completely silent as to (a) the timing and nature of costs incurred, (b) the rates at which lawyers charged, and (c) the amount likely to be recoverable on assessment in the event that that took place. There is substantially less evidentiary material than what was held to be insufficient in Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2011] NSWSC 11. In that decision, Barrett J concluded at [56]: 'Because the material on which NGC relies upon this application is insufficient to ground a well-informed exercise of the discretion to make a gross sum costs order, the court will not make such an order; and this is so despite the matters of complexity of costs assessment and impecuniosity of the plaintiffs liable for costs that would otherwise make such an order appropriate.'" 12. True it is that the costs before the primary judge do not appear to be unreasonably high, having regard to the nature of the matter and the length of the trial, and including the series of requests at the end of 2016 for further submissions. However, there is no sufficient evidentiary basis to permit the Court to infer that $90,000 is the appropriate sum, or indeed that the $90,000 sought would be less than the amount recoverable on assessment. In those circumstances, it is not appropriate to accede to this aspect of the motion. So to do would be to run the risk of penalising the respondent. It is for the appellant to demonstrate that the gross sum costs order it seeks does not place the respondent in a worse position. This it has failed to do.

Is Decon's claim limited to its costs thrown away? 22 Based on the evidence before me it is apparent that Decon's claim includes costs that cannot properly be classified as costs thrown away by reason of the adjournment. 23 A sum of $8,112 excluding GST is claimed for solicitors' fees. The table recording the work carried out by each solicitor includes work carried out in the period from 28 May 2020 to 2 June 2020. The evidence before me establishes that the plaintiffs notified Decon's solicitors of their intention to apply for an adjournment by email sent at 8.51 pm on 31 May 2020. On 1 June 2020 at approximately 10.32 am the solicitor for the plaintiffs, Ourania Konstantinidis, swore an affidavit in support of that application for an adjournment and thereafter provided a copy to Decon's solicitors. 24 In those circumstances, it is difficult to see how, save in one limited respect, work carried out on 28, 29 and 31 May 2020 could properly be classified as costs thrown away by reason of the adjournment. The narratives for the work carried out support that conclusion. The exception is the 0.4 hours of work undertaken by a solicitor on 28 May 2020 in relation to organising for attendance at the hearing which took place by way of video conferencing facility. 25 I turn then to consider the claim made for counsel fees, being $5,880 excluding GST for junior counsel and $13,500 excluding GST for senior counsel. In the case of senior counsel, the amount claimed is less than the amount included in his tax invoice, which is in evidence, in that senior counsel's daily rate has been reduced so that the amount claimed is within the range in the National Guide to Counsel Fees, albeit at the top end of that range, and so that only one hour of time is claimed for work done on 31 May 2020. 26 I do not accept that the claim for one hour of work on 31 May 2020 by each counsel should not be included as costs thrown away. While it is curious, given that Ms Konstanidis' affidavit was only provided the following morning, that each counsel refers to review of an affidavit on that date, I would infer, in the face of the evidence, that there was some communication and thus work done about the proposed adjournment after the plaintiffs informed Decon of its intentions on 31 May 2020. 27 The next issue that arises in relation to the claim for counsel fees is that Decon has claimed their fees for two full days as costs thrown away. I accept Decon's submission that the proceeding was originally set down for hearing for two days, that counsel retained set aside two days to appear at the hearing and that, until the eve of the first day of the hearing, Decon proceeded on that basis. But that of itself is not sufficient to justify the costs incurred for counsel for two days of the hearing as costs thrown away by reason of the adjournment. 28 There is some disagreement about what occurred at the conclusion of argument on the plaintiffs' application for an adjournment on 1 June 2020. Neither party referred to the transcript which relevantly records the following exchanges with senior counsel for Decon: Her Honour: So as things presently stand, I'm inclined to grant the adjournment, but I'm not inclined to grant a lengthy adjournment at all. At - really the maximum adjournment I'm inclined to grant is about two weeks. And the other issue that arises is the prejudice - the costs prejudice to your client, Mr Roberts. You haven't addressed me on that; but I assumed that any adjournment would have to be on the usual basis of - that your client would get its costs thrown away. Mr Roberts: Your Honour, I don't think I can say that there's any prejudice beyond the usual - or the prejudice one might infer in a delay - a short delay of that nature. However, as things currently stand, despite the fact that there seem to be just a never-ending series of applications and hearings and proceedings in this matter, the applicants are - if not insolvent - on the verge of insolvency. We have a number of costs orders already awarded in our favour. It's unlikely, on the basis of what our friends say the current financial position of the applicants is, that we will ever see any of that. So a costs order thrown away, whether it's payable immediately or otherwise, is unlikely to be of much benefit to us. They just don't have the money. So, beyond that, I accept that your Honour is talking about a very short adjournment. I can't put anything that would support a prejudice beyond the usual prejudice and the costs we will suffer as a consequence which, on our understanding at the moment, we will never receive or never see. Her Honour: Mr - well, what I have initially proposed is that we come back tomorrow morning at 9.30 and I be told. I'm just seeing if I can come back at 9.30. I can't come back at 9.30. At 10.15, and - to be informed what, exactly, has happened so that I can then formulate exactly the order that I would make. And, on that basis, I told you my thinking. In other words, a short adjournment. I'm prepared to accede to the application to the extent that it is a short adjournment only; but not a lengthy adjournment. … Her Honour: Yes. Costs thrown away by reason of the adjournment. Well, when I say a short adjournment, I mean a short adjournment. Do the parties wish to come back tomorrow morning, or do you wish me to make orders now? Mr Roberts: It depends on when the Court of Appeal can accommodate my friend, I think. Her Honour: Yes, it does. Mr Roberts: It, perhaps, might be worthwhile coming back briefly tomorrow just so we can get an answer as to - - - Her Honour: Yes. Mr Roberts: - - - how long it's likely to take to get the appeal on. Her Honour: Yes. And to get a decision. But I can tell you, when I said "a short adjournment" I mean that I - an adjournment that would lead to this matter being heard in June. 29 At the conclusion of the hearing of the application for an adjournment, I adjourned the hearing at 12.07 pm until the following morning on the basis that a short adjournment would be granted subject to the time at which the Appeal Proceeding could be heard. It was also suggested by senior counsel for Decon that the time set aside for the hearing on 2 June 2020 might be used to determine the objections, with junior counsel for the parties to discuss the objections prior to that time with a view to attempting to resolve them inter partes where possible. 30 On the following morning, the matter was again listed and the order was made adjourning the hearing to 24 June 2020. While a revised list of objections had been provided, reducing the objections to those in relation to which a ruling was required, it was determined that it would be more expedient to address the remaining objections at the hearing. The matter was adjourned at 10.32 am until 24 June 2020. 31 When Decon's claim for its counsel fees is considered in the context set out above and in the absence of evidence about the nature of counsels' retainers and whether they were prevented from seeking any other work, despite counsel setting aside two days, I do not think that both days can be recovered as costs thrown away. I would allow one day for each counsel as well as the additional hour spent on the eve of the first day of hearing as costs thrown away by reason of the adjournment. 32 When those matters are taken into account, the amount of Decon's claim is reduced to $15,887 excluding GST, made up of $5,707 for solicitors' fees and $10,180 for counsels' fees.

Can the costs payable to Decon be properly quantified? 33 The remaining issue is whether the Court can properly quantify Decon's costs given that, putting to one side the reduction in senior counsel's and Mr Coleman's rates so that they come within the National Guide to Counsel Fees and the Court's scale respectively, on its face the claim is for all of its costs incurred. 34 The plaintiffs urge that Decon's application should be dismissed because, relevantly, I cannot be satisfied that the costs actually incurred would likely be allowed on a taxation carried out on a party/party basis. However, beyond making submissions to that effect, the plaintiffs have not led any evidence to challenge the reasonableness of the costs claimed by Decon. While the plaintiffs' invitation has some attraction, to accede to it would not be consistent with s 37M of the Federal Court of Australia Act 1976 (Cth) (FCA Act) and the overarching purpose of the facilitation of disputes as quickly, inexpensively and efficiently as possible. Further, the purpose of the process of awarding and calculating costs on a lump sum basis is, in conformity with s 37M of the FCA Act, to avoid the time and cost of a taxation. In those circumstances it is not in the parties' interests simply to refuse to quantify the costs in this case, particularly given the relatively modest amount of Decon's claim. 35 The order made in Decon's favour was that the plaintiffs pay its costs thrown away by reason of the adjournment payable forthwith and in a lump sum. Those costs are payable on the ordinary basis, that is on a party/party basis. 36 In contrast to the position that seems to have arisen in Gould (No 2), in conformity with the Costs PN, there is evidence before me of Decon's costs including the hourly rates of the solicitors and counsel, the breakdown by percentage of the work done by each solicitor and a narrative of the work carried out, counsel fees as a percentage of total costs and a breakdown of those fees. Mr Coleman also states that the amounts claimed fall within the amounts permissible for any item under the Court's scale, the Court's National Guide to Counsel Fees and the Court's National Guide to Discretionary Items in Bills of Costs. 37 As set out at [32] above, I have concluded that the amount of $15,887 excluding GST represents Decon's costs thrown away, made up of $5,707 for solicitors' fees and $10,180 for counsels' fees. As to each component, I note the following: (1) in relation to the solicitors' fees claimed, there is no evidence given by Decon of the amount by which those fees might be reduced on a taxation carried out on a party/party basis. Nor is there any evidence led by the plaintiffs as to the reasonableness or otherwise of the rates or amounts claimed. That said, that the amounts claimed fall within the amounts permissible for any item under the Court's scale is not sufficient to satisfy me that Decon would recover all of its solicitors' fees on a taxation carried out on that basis. However, I am satisfied and it cannot be in dispute that Decon would recover at least 50% of the amount claimed and thus the amount of $5,707 should be reduced on that basis to $2,854; and (2) in relation to counsels' fees, the daily and hourly rates claimed fall within the National Guide to Counsel Fees. In those circumstances, I am satisfied that Decon would recover the entirety of those fees on a taxation carried out on a party/party basis and thus there should be no further reduction of the amount I have allowed as costs for counsels' fees thrown away by reason of the adjournment. 38 It follows that an order should be made that Decon's costs thrown away by reason of the adjournment should be quantified in the sum of $13,034 excluding GST.

conclusion 39 In light of the matters set out above, I will make an order that the costs payable pursuant to Order 2 made on 2 June 2020 be quantified in the sum of $13,034 excluding GST. 40 The plaintiffs seek their costs of this application. However, while they have achieved some success in reducing the costs claimed, the more appropriate order, in the circumstances, is that each party pay its own costs of Decon's application for quantification of its costs. 41 I will make orders accordingly. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Markovic.