FEDERAL COURT OF AUSTRALIA

Tisdall v Health Insurance Commission [2003] FCAFC 198

COSTS – appeal – appeal dismissed by consent – indemnity costs

DR PETER THOMAS TISDALL v HEALTH INSURANCE COMMISSION, DR ALAN JOHN HOLMES (as the Director of Professional Services Review), DR KENNETH NEVILLE (as Chairperson of Professional Services Review Committee no. 106), DR DAVID ROSENTHAL (as a Member of Professional Services Review Committee no. 106), DR NICHOLAS DEMEDIUK (as a Member of Professional Services Review Committee No. 106) AND DR LOUISE MORAUTA (as the Determining Officer)

V 143 OF 2002

MADGWICK, FINKELSTEIN AND DOWSETT JJ

22 AUGUST 2003

MELBOURNE

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

THE COURT ORDERS THAT:

1.                  The appeal is, by consent (except as to costs) dismissed.

2.                  The appellant is to pay the respondents’ costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT

MADGWICK & FINKELSTEIN JJ:

1                     After an adjournment, at the appellant’s request, to enable him to present further argument on a new ground of appeal, the appellant has indicated that he is prepared to consent to the proceedings being dismissed with costs.  The respondents however submit that they are entitled to an order for indemnity costs.

2                     The respondents rely on the combination of the following circumstances:

·                    the ground of appeal ultimately relied upon was advanced late;

·                    the appellant failed when the hearing was fixed to present the necessary detailed argument in support of that ground of appeal;

·                    it emerged that the appellant’s counsel had not read the transcript which his client had of the lengthy hearing before the administrative committee, the findings of which the appellant sought, by his application to the court, to impugn; and

·                    the appellant’s failure to advise the respondents formally and timeously of the abandonment of the original 30 grounds of appeal; thereby the respondents were obliged to prepare extensive detailed factual submissions and to produce to the court the extensive relevant evidence before the Committee. 

3                     It is clear that the usual order for costs will, to the extent that such an order is compensatory, compensate the respondents for all the extra and unnecessary work necessitated by the appellant’s conduct of the litigation.  That being so, the question is whether that conduct falls sufficiently outside the grounds of what might be called the normal hazards of litigation, including some degree of inefficiency, as to warrant an order for indemnity costs.

4                     In our opinion it does not.  The appellant felt obliged to change his legal advisors.  It appears that counsel who appeared on the appeal was briefed in circumstances that prevented him getting fully on top of a case involving a series of complex factual issues.  The appellant was not without any argument to present, even though it has been properly recognised, at length, that it was not one likely to find favour with us.  When that realisation occurred, albeit belatedly, neither the appellant nor his advisers failed to act on it.  The case comes down to the fact that proper realisation of the weakness of the appellant’s argument was delayed. 

5                     The question of indemnity costs falls to be determined within a broad discretion.  However, we do not feel that, in the circumstances as we apprehend them, an order for indemnity costs is warranted. That is not to say that we lack sympathy in general, with the views of Dowsett J. The implications of such views warrant further consideration in an appropriate case.

6                     The order of the court will be that the appeal is, by consent (except as to the question of costs), dismissed and the respondents shall have their costs.

Associate:

Dated:              22 August 2003

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT

DOWSETT J:

7                     I have had the opportunity of reading the reasons of Madgwick and Finkelstein JJ in this matter and am in general agreement with them. 

8                     When a party seeks an order for costs on an “indemnity basis”, it implicitly represents that there is reason to believe that an order for costs taxed as between party and party will not fully compensate it for all costs reasonably incurred in its conduct of the proceedings.  Traditionally, an order for “indemnity costs” was only rarely sought.  However that is no longer the case.  The frequency of such applications suggests that the profession may simply assume the inadequacy of “party and party” costs.  I do not accept that such is necessarily the case, particularly where the proceedings in question are reasonably limited in their ambit.  In an appeal, the issues have been defined by pleadings and/or by the evidence and have been identified and addressed in the reasons at first instance.  One would expect that preparation for the appeal would be so focussed that costs reasonably incurred would be recoverable as “party and party” costs.  If legal advisers assume the inadequacy of “party and party” costs, there is a risk that the expectation will become self-fulfilling.  An order for “indemnity” costs would then become an invitation to the relevant legal advisers to charge more than they would have charged had the client received only the benefit of a “party and party” costs order.

9                     I am no longer willing to assume that “party and party” costs will always be an inadequate basis for the recovery of costs reasonably incurred.  In my view, a party seeking an order on any basis other than “party and party” taxation ought explain briefly why it is thought that the usual order will not be adequate.

10                  The point is illustrated by the present case.  The complaints made in the submissions are of changes in the appellant’s grounds.  However, as Madgwick and Finkelstein JJ have demonstrated, that does not mean that costs thrown away as the result of such changes will be unrecoverable on a “party and party” taxation.  Nonetheless, that conclusion appears to be implied in the submissions.  If practitioners are concerned that amounts allowed on “party and party” taxation do not reflect realistic levels of professional charging, they should pursue available remedies in individual cases and/or make representations as to existing fee levels.

11                  I would decline the application for indemnity costs.

Associate:

Dated:              22 August 2003