Vantage Holdings Pty Ltd v Huang

REASONS FOR JUDGMENT 1 In Vantage Holdings Pty Ltd v Huang [2015] FCA 155 I ordered that Mr Huang's interlocutory application filed 19 December 2014 be dismissed. Mr Huang had sought security for costs against the applicant to the substantive proceedings, Vantage Holdings Pty Ltd ("Vantage"). I also ordered that Mr Huang pay the costs of Vantage on a party-party basis. 2 After I delivered judgment, Mr Stunden for Vantage asked if I would be minded to vary the order to fix costs in the sum of $34,934.62, to be paid within 14 days. In support of this oral application Mr Stunden handed up an affidavit sworn on 4 March 2015 by Mr Levi Smouha, the solicitor for Vantage, in which Mr Smouha had given evidence as to the break-down of the sum of $34,934.62. Mr Stunden also submitted, in summary, that: the Court has power to fix costs; and the affidavit of Mr Smouha set out in some detail the costs which had been incurred by Vantage, on a party-party basis, in respect of this interlocutory proceeding. 3 I adjourned the hearing for a short time to allow Ms Chen for Mr Huang to consider Mr Smouha's affidavit. After the adjournment Ms Chen submitted, in summary, that: as a general proposition costs should be assessed at the end of a proceeding; Mr Huang's interlocutory application was not frivolous; Mr Huang's interlocutory application had a reasonable prospect of success; Mr Huang's legal representatives had been required to obtain information in respect of the financial and business affairs of Vantage when this material could have been provided by Vantage; it was appropriate for Mr Huang to seek some expert advice in respect of the costs allegedly incurred by Vantage; in any event payment of costs within 30 days would be more convenient to Mr Huang. 4 After hearing these submissions I ordered that the order I made in Vantage Holdings Pty Ltd v Huang [2015] FCA 155 be varied so that the costs of Vantage to be paid by Mr Huang be fixed in the sum of $34,934.62, to be paid within 30 days. I indicated that I would provide short written reasons for this decision. These are those reasons. 5 Section 43(1) and (2) of the Federal Court of Australia Act 1976 (Cth) ("the Act") confers a broad discretion on the Court to make orders with respect to costs, the only fetter on that discretion being that the discretion be exercised judicially: Tramanco Pty Ltd v BPW Transpec Pty Ltd (No 2) [2014] FCAFC 58; P v Child Support Registrar (No 2) [2014] FCAFC 119. Further, s 43(3)(d) of that Act empowers the Court to award a party costs in a specified sum. 6 Materially, r 40.02 of the Federal Court Rules 2011 (Cth) ("Federal Court Rules 2011") provides: Other order for costs A party or a person who is entitled to costs may apply to the Court for an order that costs: (a) … (b) be awarded in a lump sum, instead of, or in addition to, any taxed costs; or (c) ... … 7 Further, Practice Note CM 4 issued on 1 August 2011 notes that an application under r 40.02(b) must be accompanied by an affidavit stating: (a) the amount of the lump sum sought to be specified in the order; and (b) how the lump sum has been arrived at and how it is justified. 8 In respect of the matter before me I note the following. 9 First, I do not accept that it is standard practice that costs are assessed and ordered at the end of a hearing. Indeed r 40.02 recognises that a party who is already entitled to costs may apply to the Court for an order that an existing costs order be varied (cf von Doussa J in Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 120, and see commentary in Dal Pont GE, Law of Costs (3rd ed, LexisNexis Butterworths, 2013) at 15.14). There is no reason for me to find that this rule does not apply to costs of an interlocutory proceeding. 10 Second, as Mortimer J observed in Avetmiss Easy Pty Ltd v Australian Skills Qualifications Authority (No 2) [2014] 315 ALR 131 at [30] the principles embodied in s 37M of the Act are relevant to take into consideration in deciding whether to order costs be fixed, and in particular: To proceed to a taxation of costs even though the proceeding itself has not involved complex issues or many stages would nevertheless involve significant further time, trouble, delay, expense and aggravation, disproportionate to the complexity of the proceeding and inconsistent with the overarching purpose set out in s37M(1) of the [Federal Court of Australia Act]. 11 Third, it is reasonable to order that costs be fixed in circumstances where the matter is relatively simple: Avetmiss at [19]; Byrnes v Brisconnections Management Co Ltd (No 2) [2009] FCA 1432 at [51]. In this case I consider that while the matter before the Court was hotly contested, being referable to an interlocutory application for which the hearing required one day, the matter was sufficiently simple that it is both possible and expedient to order costs of Vantage be fixed. 12 Fourth, Ms Chen's submissions concerning the efforts required of Mr Huang to pursue the interlocutory application against Vantage and the merits of that application are in my view irrelevant to the question whether costs should be fixed. Those issues were potentially of relevance to the question of where costs should lie and whether they should be assessed on an indemnity or party-party basis. In my view however no reasons of substance were advanced to disturb the general position that costs ought follow the event and that Vantage is entitled to its costs in respect of the interlocutory proceeding: Oshlack v Richmond River Council (1998) 193 CLR 72; cf r 40.04(a) Federal Court Rules 2011. 13 Fifth, I am satisfied that, having regard to the information before me, I can arrive at an appropriate costs sum (cf Giles JA in Harrison v Schipp (2002) 54 NSWLR 738 at [22]; Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2011] NSWSC 11 at [11]). Mr Smouha's affidavit sets out in detail matters including: A description of professional fees of the solicitors of Vantage incurred for specifically identified periods of time and tasks. The method of calculation of the professional fees of the solicitors for Vantage, itemised by reference to position of the practitioner in the firm, fractions of hours, charge out rates, tasks and GST. The professional fees of Counsel by reference to periods of time and tasks. The total costs incurred by Vantage in relation to the interlocutory application by reference to assessment on the standard basis under the Federal Court of Australia scale at Sch 3 to the Federal Court Rules 2011. A further itemisation of costs detailed earlier in the affidavit by reference to items in the scale. Explanation of discounts applied to specific costs. 14 In this respect I am satisfied that a factual basis for the exercise for my discretion to order fixed costs has been provided and that the approach taken by Mr Smouha to estimate costs is logical, fair and reasonable (Beach Petroleum NL v Johnson (No 2) at 123, Dal Pont at 15.17, contrast the findings of Flick J in Motor Trades Association of Australia Superannuation Fund Pty Ltd v Rickus [2007] FCA 1878 at [26] and in Wenkart v Pantzer (No 3) [2010] FCA 1423). I am not persuaded that the matter before me is sufficiently complex as to warrant evidence from an independent costs consultant. 15 Finally, I am satisfied that the amount of fixed costs is proportionate to the nature, complexity and importance of the interlocutory proceeding: Canvas Graphics Pty Ltd v Kodak (Australasia) Pty Ltd [1998] FCA 23; Bitek Pty Ltd v IConnect Pty Ltd (2012) 290 ALR 288 at [18]. General principles in respect of applications for security for costs are reasonably well-settled, however Vantage bore the evidentiary onus to persuade the Court in this case that the Court ought not exercise its discretion to order security for costs. This task clearly required not only review of legal principles but some detailed reference to materials in the case. I also note the importance to Vantage of successfully opposing the application for security for costs in circumstances where the proceeding is well-advanced, large sums of money have already been spent on legal fees in pursuing the case, and there was evidence that an order for security in the terms sought by Mr Huang would likely stifle the litigation. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier.