REASONS FOR JUDGMENT
1 As a sequel to the dismissal of the Conservation Council's application, qv Wide Bay Conservation Council Inc v Burnett Water Pty Ltd (No 8) [2011] FCA 175 (the principal judgment), Burnett Water made an application not just for an order that costs follow that event but also for orders that so much of its costs as were referable to the allegation of misconduct made against it but abandoned during trial be taxed on an indemnity basis and, further, that its costs be assessed in a gross sum. These reasons for judgment concern that application. They must be read in conjunction with those given in the principal judgment for the dismissal of the substantive application.
2 The Conservation Council neither consented to nor opposed any of the orders sought. Rather, its stance was to abide the order of the Court.
3 Unlike, for example, s 457 of the Sustainable Planning Act 2009 (Qld) (Sustainable Planning Act) in respect of a proceeding in State jurisdiction in the Planning and Environment Court and the position under some Commonwealth Acts which confer jurisdiction on this Court, for example, s 570 of the Fair Work Act 2009 (Cth) and s 85A of the Native Title Act 1993 (Cth), the Environmental Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act) does not contain any provision which limits the general discretionary power in respect of the awarding of costs conferred on the Court by s 43 of the Federal Court of Australia Act 1976 (Cth).
4 One of the purposes of the environmental impact statement process under Queensland's Sustainable Planning Act is the meeting of assessment requirements for development which is, under the EPBC Act, a controlled action: s 689(h)(i). It is possible to envisage circumstances where litigation touching on such a requirement might occur in that State's Planning and Environment Court, where the costs power would not be at large, and where litigation in respect of the controlled action giving rise to that requirement might occur in this Court, where the costs power would be at large. The respective Parliaments have made differing value judgments as to the extent to which parties to litigation touching on the operation of the EPBC Act should be exposed to an order for costs.
5 The Commonwealth Parliament has made its value judgment even in respect of cases where it has, by s 475(1) of the EPBC Act, conferred standing on a body such as the Conservation Council, in addition to the Minister, to seek injunctive relief in respect of conduct that is alleged to constitute an offence against or other contravention of that Act. As I observe in the principal judgment, at [21], that conferral of standing is an exception to the traditional public law position that it is the Attorney-General who has standing to seek in the public interest the judicial review and remedies in respect of allegedly unlawful acts.
6 When an Attorney-General (or, as is now not unusual by express statutory provision, a Minister who administers the particular legislation) institutes such proceedings that official is able to command for that purpose all of the financial and other resources of a body politic. That is not the case in respect of a person who falls within the definition of "interested person" for the purposes of s 475(1) of the EPBC Act. The resources available to such a person will, inevitably, be very different to those of a body politic. Yet the potential exposure to an order for costs, in the event that the proceeding fails, of each class with standing to institute an enforcement proceeding, Minister or "interested person", is no different. In some cases, the public policy objective of facilitating, by an express conferral of wider standing, the seeking of an enforcement remedy in cases where the Minister may be unable or unwilling so to do may be undermined by the absence of any special provision in respect of costs. Equally though, in other cases, the absence of any such special provision may serve to temper what I described in the principal judgment, at [26], as the litigious ardour of the zealot, with consequent saving of expense for a prospective respondent and of scarce judicial resources.
7 As the EPBC Act stands, the value judgment Parliament has made is not to confer any special, general immunity as to costs on an "interested person". Rather, if, in a matter arising under the EPBC Act, there is to be an exception in respect of proceedings instituted by "interested persons" from the usual position in respect of an exercise of the discretion as to the awarding of costs conferred by s 43 of the Federal Court of Australia Act, which is that costs follow the event, that exception must be found in the circumstances of a particular case. For the present, the position is as put by Burchett J in Australian Conservation Foundation v Forestry Commission (1986) 81 ALR 166 at 170-171 in a passage which (at 171) concludes with the following observation:
If a body is set up to pursue causes, which its founders consider to be in the public interest, and which generally may be in the public interest, by means including court proceedings against others, it does not follow that those proceeded against should be deprived of the ordinary protection of a right to an order in respect of their costs in the event the claims made against them prove unfounded.
That passage, including that observation, was expressly approved by Lindgren and Lehane JJ in Qantas Airways v Cameron (No 3) (1996) 68 FCR 387 at 389 and later in Friends of Hinchinbrook Society Inc v Minister for the Environment (No 5) (1998) 84 FCR 186 at 188. Nothing in the later observations on the subject of the costs discretion made by various members of the High Court in Oshlack v Richmond River Council (1998) 193 CLR 72 at [2] per Brennan CJ, at [30]-[31] per Gaudron and Gummow JJ and at [91], [97]-[98] per McHugh J calls into question the correctness of the observation made by Burchett J. Thus, if there is to be a departure from the usual order as to costs in this matter such as would deprive Burnett Water of some or all of the costs which remain for determination it must be found not in some general, nebulous, public interest litigation exception but rather in some special feature of this case.
8 That special feature is not to be found merely in the self appointed conservation protection and interest group status of the Conservation Council. Nor, in my opinion, is it to be found just in the desirability, long recognised in Queensland, of taking in the public interest measures to preserve for posterity the Queensland lungfish. That is a relevant but not determinative consideration in respect of any departure from the usual order.
9 It was a feature of the case that the upstream fish transfer device found at the Paradise Dam was similar to one which was to be incorporated into the proposed Traveston Dam on the Mary River. Especially prior to the decision taken by the Minister not to approve the latter under the EPBC Act, that feature led to a degree of wider interest in this case, but I remind myself that the interest of the public in a case is not to be confused with whether the institution or defence of a proceeding should be regarded as in the public interest. Further, and as Burnett Water rightly highlighted in its submissions, whatever benefit may have been perceived by the Conservation Council in the institution and prosecution of this proceeding in respect of the making of a Ministerial decision as to whether to approve that proposed dam is a benefit foreign to this proceeding. A special feature of a case warranting a departure from the usual order as to costs is not to be found in a collateral purpose of a party.
10 A consideration which may be relevant, in light of what I apprehend to be one reason why Parliament has liberalised and made express provision in respect of the standing to seek injunctive relief, is the studied distancing of himself from this proceeding by the then Minister, notwithstanding the preliminary and then final administrative conclusion of officers of his department that there had been "partial non-compliance" by Burnett Water with the conditions of the Ministerial approval of the construction and operation of the Paradise Dam. As an abstract, general proposition, even though it ultimately failed, and at least in circumstances where it could not be concluded that the institution and prosecution of a proceeding for enforcement in a matter concerning a listed vulnerable species was frivolous or vexatious, a proceeding instituted by an interested person in circumstances where, notwithstanding a conclusion that a condition of an approval had been breached, a Minister was unable or unwilling to take enforcement action may well warrant a departure, in whole or in part, from the usual order as to costs. That consideration was not a feature of Wilderness Society Inc v Turnbull, Minister for the Environment and Water Resources (2007) 98 ALD 651 where the discretion was exercised so as to make the usual order that costs follow the event.
11 Does this general proposition have application in this case? In the "Final Compliance Audit Report" dated 28 December 2008, prepared by the Minister's department in respect of an audit of the Paradise Dam conducted between 25 and 28 June 2007, the following departmental response is made in respect of one of the department's perceived "partial non-compliances" with the conditions of the Ministerial approval namely, "The Fishway has not fully commenced":
The fishway was to commence when the dam became operational. It is DEWHA's [By then the Minister's portfolio had become known as the Department of the Environment, Water, Heritage and the Arts] view that the dam became operational in December 2005. Only part of the fishway is operating (upstream).
A rating of partial compliance is given where there is more than one element to the condition or requirement being assessed and the auditee has complied with some but not all elements. In this instance the fishway contains both upstream and downstream elements, and both of these have not been met, therefore a rating of partial compliance is appropriate. It is however noted, that the rating of partial compliance is due to drought conditions and low dam levels.
It should also be noted that the requirements of the State differ from that of the Federal Government. The Federal Government's condition issued by DEWHA does not specify an operating range.
This response was based upon a construction of condition 3 that, for reasons given in the principal judgment, was incorrect. It is elsewhere apparent in this audit report that the construction of the condition which came to prevail was put to the department by Burnett Water in the course of its response to the draft of that report, which it received on 1 August 2007. The department's view as to the construction of the condition reflected that adopted by the authors of the draft audit report.
12 In the interval between its receipt of the draft audit report in August 2007 and the department's issuing of the final audit report extensive correspondence passed between Burnett Water and the department in relation, initially and materially, to whether there was partial non-compliance as alleged and thereafter as to measures which might be taken to address the same. In the course of that correspondence the department expressed the view (letter of 31 October 2008) that its position had never been that that the fishway (ie upstream and downstream devices) had to operate 100% of the time. In that same letter the department expressly drew attention to the requirement in condition 3 that the fishway be "suitable for the lungfish". Overall, the impression gained from the exchange of correspondence, which continued into 2009, is that the department was not so much concerned with whether the fishway at the dam had become operational when required but rather whether it was in any event in the prevailing circumstances "suitable for the lungfish". To that end, there is much discussion in the exchange concerning the formulation and provision of results of a monitoring programme.
13 It is certainly not the case that the Minister is obliged to institute enforcement proceedings in each and every case where he believes that a contravention of the EPBC Act has occurred. Whether or not so to do is a matter for the discretionary value judgment of the Minister, with the benefit of advice from his department, in the course of his general administration of the EPBC Act. Sometimes, and the present case appears to be one, a policy of watchful waiting, as opposed to the institution of enforcement proceedings, may commend itself to the Minister as the more prudent course to take, at least as an initial response. The making of such value judgments is the peculiar and particular responsibility of a Minister of State for which he is responsible to Parliament and perhaps also to what is sometimes termed the court of public opinion, but not to this Court. What is prudent, watchful waiting to some may appear to be supervised neglect or inaction in the face of an apparent contravention to others, particularly to those who have not been privy to an exchange of correspondence in relation to an audit report and who do not, as does a Minister, have the benefit of all of the advisory and other resources of a Department of State.
14 It is not difficult to see how, in the face of a persisting and readily observable failure on the part of the impounded water in the Paradise Dam, following its December 2005 commissioning, to reach the level of the downstream fish transfer device, coupled with the periods of inoperability of the upstream device, also readily observable, and an absence of the institution of enforcement proceedings by the Minister, an interest group such as the Conservation Council might conclude, given the listed vulnerability of the lungfish, that it ought to exercise the standing conferred on it by Parliament to take action, because there was Ministerial inaction. Put another way, it is not impossible to see how, questions of suitability aside, the Conservation Council might have concluded that the fishway just had not commenced operation as required. Though it did not prevail, the construction of condition 3 which the Conservation Council came to promote was neither not reasonably open nor idiosyncratic. Condition 3 admitted of difficulties of construction and the construction promoted by the Conservation Council was one shared by the Minister.
15 It is important in deciding whether, in a case like the present, there are special circumstances warranting a departure from the usual order as to costs not wholly to judge the course of action taken by the Conservation Council by reference to the wisdom of hindsight. At the time when the Conservation Council instituted this proceeding in 2008 and viewing the matter in prospect, it is not impossible to see how the Conservation Council might have concluded that the Minister was unwilling to institute an enforcement proceeding which needed to be instituted. That is so even though, with the benefit of examining the departmental correspondence directed to Burnett Water, the better view is that the lack of Ministerially instituted enforcement proceedings was the result of a value judgment that the better course, in the prevailing circumstances which included a then persisting drought, was to await the results of monitoring.
16 There is though a speculative quality to the reaching of conclusions about the Conservation Council's motivations in respect of such matters. Neither its president nor any other officer of the Council has given evidence on the costs application as to the reasons why, on the information then to hand, the Conservation Council instituted the proceeding. Had such an officer of the Conservation Council given evidence, he or she would have been amenable to cross-examination on behalf of Burnett Water. That may, for example, have revealed the nature and extent, if any, to which the Council was privy, in advance of its instituting this proceeding, to the course the department had chosen to adopt following the audit in 2007. I do not consider that speculation as to what may have been the Conservation Council's motivations is a basis for concluding that special circumstances exist warranting a departure from the usual order as to costs.
17 Section 475 of the EPBC Act does not confer standing upon an "interested person" just to seek declaratory relief, as opposed to injunctive relief in respect of a contravention. It is possible to seek for declaratory relief in conjunction with an application for injunctive relief. Further, the Federal Court Rules admit of the possibility of the determination of a separate question of law or fact. One course open to the Conservation Council would have been to seek the determination as a separate question, of whether, on the true construction of condition 3, the downstream fish transfer device had commenced operation when the dam was commissioned, given that the water level did not then reach its entry level. That fact was an uncontroversial given.
18 Ordering that a question be the subject of separate determination can be fraught with the prospect of serving only to delay the final determination of a matter by reason of appellate challenge to the answer given to the separate question. Sometimes though the determination of that separate question may, either in law or in any event in practice, settle a controversy. Again, had such a course been adopted by the Conservation Council, there may well have been a basis, in circumstances of inaction by the Minister, for not ordering the Council to pay costs in respect of the hearing and determination of such a separate question.
19 This though is not the course which the Conservation Council chose to adopt. A failure to commence operation was but one facet of a wider alleged contravention case which it sought to mount. That wider case involved a broad factual excursion into the subject of whether, as constructed in that location, the fishway at the dam was "suitable for the lungfish". The Conservation Council persisted in the prosecution of that wider case in the face of it being served with the affidavit evidence from two eminent experts, Dr Mallen-Cooper and Dr Kind. Of course it was entitled to do this and to rely on the views of Mr Tait, whom it considered to be an expert. However, that it chose so to do is not, in my opinion, a circumstance telling in favour of a departure from the usual order as to costs, rather the reverse. Given the background of Ministerial inaction, a listed vulnerable species and an apparently inoperable fishway, the position may well have been different had the Conservation Council sought to discontinue the proceeding once it had the benefit of the affidavit evidence of Dr Mallen-Cooper and Dr Kind and an opportunity, via discovery and the affidavit of Burnett Water's Chief Executive Officer, Mr Boettcher, to study the exchange of correspondence in relation to the departmental compliance audit which passed between the department and that company. This also was not a course adopted by the Conservation Council.
20 Contrary to the submission of Burnett Water, I do not regard the admittedly lamentable history of the evolution of the Conservation Council's statement of claim as relevant to whether or not to order the Council to pay such of the costs of the proceeding which are not already the subject of express order. Insofar as there were failings in the Conservation Council's pleadings, which became the subject of successful interlocutory applications by Burnett Water, the costs orders made on those occasions have already recognised the forensic success it enjoyed on the hearing of those applications.
21 In short then, even though the Conservation Council chose not actively to contest whether a costs order should be made, I have nonetheless expressly considered whether the circumstances of the case warrant a departure from the usual order as to costs. I do not consider that such circumstances exist.
22 Such a conclusion would, in the ordinary course, result in an order that, without prejudice to costs orders already made in favour of Burnett Water in the proceeding, the Conservation Council pay its costs of and incidental to the proceeding, including reserved costs, less the costs awarded in favour of the Council arising from the adjournment of the trial in 2009, which would be set off. Further, in default of agreement with the Council, the amount of Burnett Water's costs and those awarded in favour of the Council would have to be determined by a registrar on taxation of respective bills of costs, Burnett Water's on a party and party basis and, given the terms of the order, those of the Council on an indemnity basis.
23 As noted though, Burnett Water seeks not only that some of its costs be determined on an indemnity basis but that all of its costs be fixed in gross.
24 As to the former, the rationale for the awarding of costs ordinarily on a party and party basis and only exceptionally on an indemnity basis is the subject of a comprehensive exposition by Sheppard J in Colgate Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 (Colgate Palmolive), which is frequently cited with approval The ordinary position is that costs are awarded on a party and party basis, which does not provide a full indemnity to the beneficiary of that costs award. Neither, strictly and notwithstanding its description, does an indemnity costs order, for costs which are unreasonable in amount are excluded from costs taxed on this basis.
25 While the categories of case in which, as a matter of discretion, a departure from the ordinary position is warranted are not closed, a number of categories in which in the past indemnity costs have been awarded are summarised by Sheppard J in Colgate Palmolive at 233-234. Amongst these are the making of allegations of fraud known to be false and the making of irrelevant allegations of fraud. An allegation of fraud is but a singular example of an allegation of misconduct. I do not doubt that an indemnity costs order may be warranted in respect of costs incurred as a result of the making of such an allegation which it is known to be false or which is irrelevant. That may be viewed as a correlative of the rule of practice that an allegation in a pleading in respect of a serious matter such as fraud, bad faith, misfeasance, or misconduct must not be made unless the author of the pleading either has or reasonably expects to have at trial evidence to prove such an allegation.
26 In the present case, an allegation of misconduct on the part of Burnett Water in attempting to mislead officers of the department during the audit was made. This was not relevant to whether the fishway had or had not commenced operation or was or was not suitable in terms of condition 3 of the Ministerial approval. Such misconduct on the part of Burnett Water could only have been relevant to whether a contravention of a condition of the approval was knowing and thus to an exercise of discretion as to whether to grant injunctive relief and perhaps also to the terms of that relief. Much of Mr Boettcher's affidavit was directed to the subject of dealings between Burnett Water and the department in relation to the audit. Save for the allegation of misconduct, an account of those dealings was not otherwise relevant to the question of whether condition 3 had been contravened. In particular, it is axiomatic that the department's view that there had been a "partial contravention", as revealed in the correspondence exhibited to that affidavit, not only could not bind the Court but was irrelevant to the question as to whether the Conservation Council had proved the contravention it alleged and particularised.
27 The Conservation Council has not sought to explain by submissions, much less by supporting evidence, the basis upon which the allegation of misconduct was made. Viewing the matter in prospect, observations as to the "downtime" of the upstream fish transfer device, the prolonged time before the impounded water reached the level of the downstream fish transfer device and what one might term a "conspiracy theory" would not provide a basis for the making of an allegation of misconduct. I consider that Burnett Water has, exceptionally, established a basis for an order for indemnity costs, limited to the costs of and incidental to the preparation (including settling by junior counsel), filing and service of the affidavit of Mr Boettcher. It may be that so to limit the order does not wholly capture all of the costs flowing from the abandoned allegation of misconduct but the further identification of the same would greatly complicate any taxation of costs and entail, I expect, a law of diminishing returns in terms of the costs to the parties of the same relative to a difference as between Burnett Water's party and party and indemnity costs. Burnett Water did not submit how the costs relating to the allegation might be identified with precision. I consider that substantial justice will be done between the parties by so limiting the order.
28 That then leaves for resolution the question as to whether or not Burnett Water's costs should be fixed in gross?
29 That there is power to make such an order is undoubted. Materially, O 62 r 4(2)(c) of the Federal Court Rules provides that, "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 gross sum specified in the order". The power to make such an order is discretionary. A practice note (CM 4 dated 25 September 2009) is applicable. That requires that any such application be accompanied by an affidavit stating:
(a) the amount of the gross sum sought to be specified in the order; and
(b) how the gross sum has been arrived at and how it is justified.
The application made by Burnett Water was accompanied by an affidavit affirmed by a costs assessor and also by an affidavit affirmed by a solicitor in the employ of the firm acting for that company in the proceeding.
30 In my experience, the fixing of costs in gross most frequently occurs in appeals from the Federal Magistrates Court in matters arising under the Migration Act 1958 (Cth) but the occasion for the exercise of the power is by no means confined to proceedings of that kind. The prevalence of the practice in migration matters is referable to its convenience, efficiency in use of court resources, the repetitious, compressed nature of the legal work associated with such a proceeding and the present frequency of such proceedings, considerations which collectively lend themselves to ready estimation of the party and party legal costs entailed. The power though is general in its application.
31 A survey of past authority discloses that, though occasions for the wider exercise of the power have been infrequent, it has been exercised even in respect of lengthy and complicated commercial litigation, eg Seven Network Limited v News Limited [2007] FCA 2059 (Sackville J) (Seven Network). Indeed, one reason given for the exercise of the power in such cases has been that a taxation of costs in such a case would be likely to involve unreasonable delay and expense: Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 120 (Beach Petroleum). As von Doussa J notes (ibid) in Beach Petroleum, that has been regarded in the United Kingdom as the purpose of such a rule: Leary v Leary [1987] 1 WLR 72. By reference to that British authority, his Honour further observed of the power (Beach Petroleum at 120) that, "An order that costs be assessed as a gross sum does not envisage that any process similar to that involved in taxation should take place, but the power must be exercised judicially and after giving the parties an adequate opportunity to make submissions on the matter".
32 Later, in Seven Network, at [25] Sackville J summarised principles which had emerged in respect of the fixing of costs in gross. I gratefully adopt his Honour's summary:
25 The authorities establish a number of principles applicable to a claim for a gross sum costs order to be made pursuant to FCR, O 62 r 4(2)(c):
(i) The purpose of the subrule is to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation: Beach Petroleum v Johnson (No 2), at 120, per von Doussa J, applying Leary v Leary [1987] 1 All ER 261; Harrison v Schipp (2002) 54 NSWLR 738, at 742 [21] per Giles JA.
(ii) An order that costs be assessed as a gross sum does not envisage that any process similar to that involved in taxation should take place. On the contrary, the Court applies a much broader brush than would be used on a taxation of costs pursuant to O 62: Beach Petroleum v Johnson (No 2), at 120, 124, per von Doussa J; Harrison v Schipp, at 743 [22], per Giles JA.
(iii) The Court should be confident that the approach taken to the estimate of costs is logical, fair and reasonable. The Court should be astute to avoid both overestimating the recoverable costs and underestimating the appropriate amount, for example by applying an arbitrary discount to the amounts claimed: Beach Petroleum v Johnson (No 2), at 123, per von Doussa J.
(iv) Although the power to assess a gross sum for costs involves the exercise of a discretion, it is necessary to bear in mind fundamental principles applicable to an assessment of costs on a party and party basis. These include the principles contained in O 62 r 19 (embodying the "necessary or proper" test) and those stated in Stanley v Phillips (1966) 115 CLR 470, at 478, per Barwick CJ (on a party and party taxation the emphasis is upon obtaining adequate representation to enable justice to be done, not upon the propriety of steps taken to ensure maximum success in the cause): Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR 1, at 4-5 [12]-[15], per O'Loughlin J; Charlick Trading Pty Ltd v Australian National Railways Commission [2001] FCA 629, at [6]-[8], per Mansfield J.
(v) Although the methodology permitted by O 62 r 4(2)(c) initially involves a broader approach than on a normal taxation, the provisions of O 62 and Schedule 2 provide assistance in fixing an appropriate gross sum: Charlick Trading Pty Ltd v ANRC, at [10], per Mansfield J.
33 To this summary, his Honour added the following, at [26] to [30]:
26 The last point should be developed a little further. FCR, O 62 r 4(2)(c) authorises the Court to order that, instead of taxed costs, the successful party should be entitled to a gross sum costs order. The subrule contains no express direction that the Court is to apply the detailed criteria that are laid down in O 62 and Schedule 2. On the contrary, the subrule apparently leaves the question of quantification at large.
27 Rule 4(2)(c) is, however, located within an Order that makes detailed provision for the assessment of party and party costs. It would be extremely odd if the more expeditious procedure contemplated by r 4(2)(c) resulted in either a successful or an unsuccessful party being exposed to an assessment of costs which simply ignores or overrides the basic principles applicable to a taxation of costs. I accept Mr Sheahan's submission that it would be an error for a Court to use its power under r 4(2)(c) to assess a gross sum clearly higher than that which would be allowed on a taxation of costs.
28 On the other hand, it must be borne in mind that r 4(2)(c) establishes a procedure that applies instead of taxed costs. As the cases have stressed, the object of the procedure is to avoid the expense, delay and aggravation that would be involved in a taxation of costs, especially in a lengthy and complex case such as this. The procedure is intended to replace the potentially elaborate process contemplated by O 62 and Schedule 2, whereby a taxing officer meticulously analyses a specially prepared bill of costs by reference to individual items, some of which have distinctly Dickensian overtones.
29 It is necessary for the Court to have sufficient information to enable it to make a logical, fair and reasonable estimate. In this respect, as the parties agreed, Telstra bears the onus of establishing that its claim to a gross sum satisfies the applicable test. In practice, this may involve the parties adducing evidence from expert costs assessors addressing whether the costs claimed by the successful party were "necessary or proper for the attainment of justice or for maintaining or defending the rights of a party" (O 62 r 19) or, in more general terms, whether the amounts sought would have been recoverable on a taxation of costs.
30 Care should be taken, however, to ensure that the process does not take on too many of the characteristics of a taxation of costs. …
[Emphasis in original]
34 I respectfully agree with these further observations of Sackville J, subject to one qualification arising from his Honour's reference to some items which may fall for the analysis by a taxing officer of a bill of costs having "Dickensian overtones".
35 Upon a taxation of costs and in the absence of an order making specific provision to the contrary, a taxing officer is required to tax costs by reference to the scale of costs specified in the Second Schedule to the Federal Court Rules, as applicable from time to time: O 62 r 12. Some of the language employed in that schedule in respect of particular items is indeed redolent of a 19th century legal office - "engross" and "folio", for example. This acknowledged, to approach the subject of how much reasonably to allow in respect of legal costs by recalling the works of Charles Dickens may not, with respect, necessarily be a bad thing.
36 The rapaciousness in respect of fees of Dickens' character, the chancery lawyer, Mr Vholes in respect of Jarndyce v Jarndyce, the fictional case in the Court of Chancery, is a feature of his novel, "Bleak House". The views of Dickens and other authors on the legal profession were the subject of an illuminating lecture delivered in 1910 by Thomas Alexander Fyfe, Sherriff-Substitute (a Scottish judicial office, also termed Sherriff Depute, the holder of which exercises a jurisdiction similar to that of an Australian District or County Court judge) at Glasgow, to the Glasgow Dickens Society and shortly thereafter reproduced by him in book form as, "Charles Dickens and the Law", William Hodge and Company, Glasgow, 1910 (text available online at The Internet Archive, http://www.archive.org/stream/ charlesdickensla00fyfeuoft/charlesdickensla00fyfeuoft_djvu.txt).
37 Sherriff Fyfe commenced his lecture with the observation, "Charles Dickens was pre-eminently the novelist of the law, and his lawyers have a hold upon the public imagination far surpassing that of any other author. But, although his lawyer creations are most widely known, he is not the only author who has built a tale upon a legal foundation." One of the other authors to whom Sherriff Fyfe made reference was the eighteenth century Scottish novelist, Tobias Smollett, whose works influenced Dickens. Of Smollett's novel, "The Adventures of Ferdinand, Count Fathom" (1753), Fyfe stated:
In "Ferdinand, Count Fathom," we meet a different type of attorney. His fortune was made - as has happened before and since - by special ingenuity in the construction of bills of costs, and one cannot but sympathise with his luck- less client who found that his lawyer's bill included 350 consultation fees in the course of a year of only 365 days including Sundays.
But this attorney also deserves our sympathy, for Count Fathom's mode of paying his
lawyer's bill was to split the poor attorney's head with a poker, and when remonstrated with by the doctor - who took a grave view of the possible result of his violence - his reply is significant of the estimation in which, in Smollett's day, the attorney was held.
I am not so unacquainted with the resistance of an attorney's skull as to believe the chastisement I have inflicted upon him will at all endanger his life, which is in much greater danger from the hands of the common executioner.
[Emphasis added]
38 If only by its very existence, the right to subject a bill of costs to scrutiny and determination, termed "taxation", by an independent officer of the Court, subject, if required, to review by a judge, for which elaborate provision is made in O 62, has an enduring relevance, in my opinion, in the discouragement of the claiming of unreasonably high legal fees or in respect of work not reasonably necessary in proceedings in the Court against an unsuccessful party in respect of whom a costs order has been made. In undertaking the duty of taxing officer, the Court's registrars necessarily acquire and maintain an expertise in determining what is reasonable and necessary.
39 Recognising this expertise, von Doussa J, with the consent of the parties, sat with a registrar in Beach Petroleum when hearing the application made in that case. His Honour remarked of this (57 FCR at 120) that the registrar, "has been able to confirm submissions made by the parties about normal practices on taxation, and about rates customarily allowed by taxing officers in this State". In Seven Network, the practice adopted in Beach Petroleum led the parties jointly to propose to Sackville J that he sit at the hearing with one of the court's registrars with extensive experience in the taxing of bills of costs. His Honour, at [11] and [13] records the participation of the registrar in the hearing, including in the questioning of the respective costs experts called by the parties, and of the "extremely valuable" assistance which he gained from consultations with the registrar in reaching his conclusions in respect of that particular application to fix costs in gross.
40 A survey of matters other than migration appeals, which I do not suggest is exhaustive, in which application has been made for the fixing of costs in gross in non-migration matters, discloses that it is not the invariable practice of the Court for a judge to sit with a registrar when hearing such an application: AM Stevens Pty Ltd v Australian Red Cross Society [2002] FCA 91; Charlick Trading Pty Ltd v Australian National Railways Commission [2001] FCA 629 (Charlick Trading); Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR 1 (Auspine); David Sparnon v Apand Pty Ltd [1998] FCA 164; Canvas Graphics Pty Ltd v Kodak (Australasia) Pty Ltd [1998] FCA 23; Brookfield, Ian Walter & Anor v Davey Products Pty Ltd [1997] FCA 1462 (Brookfield v Davey Products). An application for the exercise of the discretion does, though, require an evidentiary foundation. The practice note anticipates as much in its requirement for any such application to be accompanied by an affidavit. In respect of lengthy or complex cases, that evidentiary foundation will often have to include expert evidence from a person familiar with the practice of taxing or assessing costs in respect of whether the amount of the gross sum sought is reasonable and why that is so.
41 Burnett Water recognised a need for the provision of expert evidence by its reliance in support of its application on the opinions expressed by Mr Bloom, a costs assessor, initially in two affidavits (filed on 3 and 11 March 2011 respectively). Mr Bloom described himself as General Manager and Senior Solicitor at QICS Costs Consultants in Brisbane.
42 Burnett Water did not though promote that I should sit with a registrar. In respect of an application that costs should be fixed in gross in a very large sum and in circumstances in which there was neither a contradictor in submissions nor a competing or check opinion in evidence, that is unfortunate though not, of course, fatal as to whether I should either proceed to fix costs in gross or to act on Mr Bloom's opinions and conclusions in respect of costs. For procedural fairness reasons, I did not consider it at all appropriate privately to consult with a registrar in relation to the amounts claimed.
43 I accept that the circumstances of this case are such that it would involve unreasonable delay and expense to require Burnett Water to tax its costs. To require that would, of course, subject Allens Arthur Robinson's bill of costs to the experienced and independent scrutiny of a registrar. There are certainly features of the fees of both counsel and solicitors, to which I advert below, which might be thought to warrant that. Equally though, the preparation of a bill of costs in taxable form would, on the evidence, visit on a company ultimately owned by shareholding Ministers on behalf of the State of Queensland tens of thousands of dollars ($70,000 to $100,000) of additional legal expenses as between solicitor and client and an associated delay of 2 to 3 months in preparation time and this in circumstances where the Conservation Council is not disposed actively to contest the amount of costs which should be awarded and where the prospect of Burnett Water's recovering any amount of costs which may be awarded is moot. Further, on the evidence, it would take a registrar some 20 days to tax the resultant bill of costs. I therefore propose to proceed to fix Burnett Water's costs in gross.
44 Whether I should do so within a range put forward by Burnett Water depends on the extent to which I am prepared to act upon the opinions expressed by Mr Bloom.
45 Another unfortunate aspect of Burnett Water's application is that, for the purpose of preparing the report and addendum report as to costs which were respectively exhibited to his affidavits filed in support of the application the solicitors acting for that company, Allens Arthur Robinson (AAR), did not direct Mr Bloom's attention to this Court's practice note in respect of expert evidence (Practice Note CM 7). Nor did Mr Bloom of his own motion make reference to the guidance offered by this practice note. The evidence which Mr Bloom gave as to costs was no less a species of expert evidence than evidence from those with expertise in other disciplines which I received in the course of the trial. The overriding duty to the Court emphasised in that practice note applies just as much to Mr Bloom as to those other expert witnesses. Again in circumstances where there was no contradictor, an assurance that the expert concerned understood that duty and had approached the task of offering expert opinion accordingly was of singular importance not, of course, with respect to the admissibility of the expert's opinion but rather with respect to the weight to give to it.
46 On the hearing of the application I pointed out to senior counsel for Burnett Water an apparent lack of engagement by Mr Bloom, on the face of his affidavits, with the requirements of the Court's practice note in respect of expert evidence. Counsel confirmed to me, on instructions, that Mr Bloom's attention had not hitherto been drawn to the practice note. A short adjournment for the purpose of securing, if possible, a supplementary affidavit from Mr Bloom addressing this deficiency and attesting to the impact on the opinions which he had expressed of his consideration of the obligations of expert witnesses as set out in the practice note was sought on behalf of Burnett Water. It seemed to me that the granting of such an adjournment was in the interests of justice.
47 It proved possible, as a result of that adjournment, for Burnett Water to secure a supplementary affidavit from Mr Bloom in which, inter alia, he deposed to having now considered the practice note concerning expert evidence and that, had he been provided with it by AAR, "my estimate of costs the subject of my Report would not have differed in any significant respect". He further deposed that, "notwithstanding the matters addressed in the Guidelines [i.e. the guidelines for expert witnesses in the practice note], the methodology I adopted to assess the costs would not have changed". Though I commend Mr Bloom's candour, it does sound a cautionary note in my mind that his estimate would have not been any different had he first considered the guidelines in the practice note. I did not have the benefit from him of particulars as to the nature and extent of the reconsideration, however abbreviated in the circumstances, that led to his adoption of the inherently imprecise formulation of no "significant" difference.
48 This aside, my confidence in the weight to afford Mr Bloom's opinions was not assisted by a patent misconception on his part in his report of 2 March 2011 (Letter to AAR of that date), described below, in relation to the range of fees for counsel specified in this Court's National Guide to Counsel's Fees (National Guide) published from time to time.
49 The National Guide gives as alternatives a daily rate range and a fee on brief range for both junior and senior counsel. In the National Guide effective from 4 January 2010 the alternative ranges are specified thus:
Applications/Appeals Junior Counsel Senior Counsel
Fee on Brief (including: preparation at discretion of taxing officer and appearance on the first day of hearing) $1,200 - 4,800 $1,950 - $7,200
OR
Appearance at hearing (daily rate including conference) $850-3,950 $1,950-6,000
Interlocutory Applications
Motion/Interlocutory hearing $350 - 2,000 $400 - 3,000
- short (up to 2 hours) $650 - 3,900 $800 - 6,0000
- long (2 hrs plus)
Other
Hourly rate for: $250 - 500 $400 - 700
Directions hearing
Preparation time
Conferences (not occurring on day of hearing)
Settling applications, statements of claim, affidavits, defence, other documents
Written submissions (where not allowed above)
Attending to receive judgment (where appropriate)
Not otherwise provided for