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[2011] FCA 1140
Federal Court of Australia
2011-10-04
Foster J
Original judgment source is linked above.
REASONS FOR JUDGMENT 1 The respondent has applied to the Court for orders requiring the applicant to put up additional security for the respondent's costs of and incidental to this proceeding. There is no dispute that the applicant is obliged to post appropriate security for the respondent's costs - the contest concerns the quantum of that security. The applicant contends that no additional security should be required for the pre-trial period and that the amount sought in respect of the trial is excessive. Pursuant to orders made by the docket judge on 5 February 2010, the applicant put up an amount of $70,000 by way of security for the respondent's costs. More recently, the applicant added to that amount the amount of $100,000. Thus, the total amount of security posted by it to date is $170,000. 2 The proceeding was commenced on 17 July 2009. The docket judge heard an application for security on 5 February 2010 and made orders for the $70,000 to which I have already referred to. In addition, on the same day, the docket judge ordered that the applicant put on its evidence by various dates specified in the orders which he made on that day. 3 After 5 February 2010, the parties filed affidavits. There is a significant body of evidence filed by each of the parties traversing dealings covering many years. 4 The respondent, having now filed its evidence, has made application for further security. That application was filed on 30 June 2011. 5 In broad terms the respondent's position is as follows: (1) The actual costs incurred to date (excluding GST) by the respondent total $394,990.70. (2) The respondent's estimate of future costs likely to be incurred by it (excluding GST) up to the conclusion of the anticipated trial (said by the respondent to be a 15 day trial) is $286,120.00. 6 The total of these two amounts is $681,110.70. 7 As far as future costs are concerned, the applicant estimates that the costs (excluding GST) that might be awarded to the respondent on the party/party basis should it be successful will be of the order of $145,395.00. That estimate is based upon a 10 day trial and is the subject of detailed submissions in writing. 8 As far as costs for the future are concerned, I think that the applicant's estimate is a little light on. On the other hand, I think that the respondent's estimate may be slightly over the mark. 9 It seems to me that the trial is likely to last more than 10 days and could go as long as 15 days. It also seems to me that preparation for the trial and other interlocutory matters likely to be undertaken between now and the commencement of the trial are likely to result in costs on the party/party basis being incurred in the order of $50,000. I think that allowing $10,000 a day on the basis of a 15 day trial is a reasonable estimate of the likely party/party costs for the trial. 10 Accordingly, it seems to me that allowing $200,000 for future costs (excluding GST) is a reasonable estimate of those costs on the party/party basis. It seems to me, given that the matter has now taken the shape that it has, that I should order as part of the amount of additional security an amount of $200,000 for likely future costs. 11 As far as past costs are concerned, the parties are in vigorous disagreement. Senior Counsel for the applicant has submitted that the docket judge intended to cover in the orders which he made on 5 February 2010 all of the costs likely to be incurred by the respondent in getting to the point in the litigation where all of the respondent's evidence was on. In a very general sense this submission is correct. However, when the docket judge was considering the matter, neither party had filed any evidence and, as is often the case, the estimate advanced by the respondent in February 2010 of the likely costs of the matter to the end of the litigation (I am told $152,000 on a party/party basis) has turned out to be woefully inadequate. 12 I have looked at the transcript of the argument before the docket judge on 5 February 2010 and it seems to me that his Honour did not finally determine the question of security even up to the point at which the evidence was to be filed. His Honour simply made a practical assessment pro tem pending further consideration. 13 The respondent called evidence from a costs consultant, Ms Deborah Vine-Hall, who is expert in the assessment of costs. Ms Vine-Hall has looked at the material filed on behalf of the respondent to date and considered the context in which that material was filed with a view to expressing an opinion as to what the likely party/party costs would be for that work should the respondent be successful. As paragraph 41 of her affidavit, Ms Vine-Hall said: Accordingly, on the basis of my experience of preparing bills of costs in the Federal Court it is my opinion that the respondent is likely to recover at least the following amounts in respect of costs incurred to 10 December 2010: Professional costs $71,400.00 Counsel's fees $202,188.00 Total $273,588.00
14 The amount of $273,588.00 specified by Ms Vine-Hall relates to the same work for which the respondent has paid $394,990.70. 15 The process of reasoning and assessment adopted by Ms Vine-Hall was criticised by the expert called on behalf of the applicant, Mr Matters. Mr Matters said that Ms Vine-Hall's methodology was flawed in two important respects. Those respects are adverted to in paragraphs 16 and 17 of his affidavit. In those paragraphs he said: 16. The first omission from Ms Vine-Hall's methodology is the absence of enquiry as to whether, and if so the quantum of, any component of Giddy Up's costs that it seeks secured is subject to an order for costs made by the Court in respect of an interlocutory step in these proceedings which precludes Giddy Up from obtaining payment of that component from Winning Form. This is of practical consequence for the opinions that Ms Vine-Hall states as the federal law web search that I undertook on 9 June 2011 disclosed that on 22 October 2010, the Court made an order in these proceedings requiring Giddy Up to pay Winning Form's costs thrown away by the filing of any amended defence in relation to which leave was granted on that date. A copy of prints of the results of my web search are annexed and marked "C". 17. The second omission is the absence of examination of the work product of Giddy Up's legal representatives in relation to these proceedings or even examination of the primary practitioner/client costs quantification material such as Menassa Barbouttis' and Messrs Connell and Higgins' tax invoices. 16 It seems to me that to require Ms Vine-Hall actually to conduct an assessment or taxation of the costs incurred to date is an unnecessary burden on an applicant for security for costs in a matter such as this. What she has done is to look at the affidavits and the material otherwise in the Court file with a view to getting a general idea as to whether or not the costs incurred were necessary and proper and with a view to coming to her own very broad assessment. I do not think Ms Vine-Hall suggested that she had conducted an assessment or taxation of the costs incurred to date. As is apparent from Mr Matters' affidavit, he did not conduct his own assessment of the costs incurred to date by the respondent. 17 The position therefore seems to be in respect of costs incurred by the respondent to date that the actual costs amount to $394,990.70 (excluding GST) whereas Ms Vine-Hall suggests that an amount of $273,588.00 would be reasonable as an assessment of those costs on the party/party basis. 18 I think that the $70,000 previously ordered by the docket judge was intended to cover only the period of time up to the filing of affidavit evidence with a reservation in favour of the respondent in order to allow any necessary top-up to occur. The respondent has not been dilatory in pressing for security although some criticism might be levelled against it in respect of the timing of the latest application. 19 However, it seems to me that I should order some additional security in respect of past costs given the state of the evidence, that is to say, the amount that has actually been incurred and Ms Vine-Hall's assessment in respect of that amount. I do not think that Mr Matters' criticisms of Ms Vine-Hall justify a different approach. 20 It is not appropriate for the Court to strike an amount by way of security which protects the respondent in respect of every dollar which it has incurred to date and will incur in the future. This is because, amongst other things, the Court is unable at this point in time to make any precise assessment of the likely amount of costs ultimately to be awarded. 21 Doing the best I can, it seems to me that, in respect of costs incurred to date, there should be an additional sum of $50,000 ordered. That is to say, a sum additional to the $170,000 already ordered. 22 This will bring the total amount of security which I propose to order up to $250,000 to which must be added the $170,000 already ordered and posted, making a total of $420,000. I propose to order additional security in the amount which I have indicated (viz $250,000.00). 23 Senior Counsel for the applicant has requested that I grant liberty to apply in respect of the orders which I propose to make because he has not had an opportunity to take proper instructions in respect of any order for security relating to the future and given that he came to the application before me today expecting only to have to deal with the claim in respect of past costs. Counsel for the respondent does not oppose the granting of such liberty and I propose to grant it. 24 The costs of the present application will be costs in the proceeding. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.
Winning Form Pty Ltd
Giddy Up Ratings Pty Ltd