FEDERAL COURT OF AUSTRALIA

IMAK International Pty Limited v WDN Exports Pty Limited [2008]

FCA 179

IMAK INTERNATIONAL PTY LIMITED (ABN 15 002 732 756) v WDN EXPORTS PTY LTD (ABN 77 115 855 653), ANTHONY JOHN WILLIAMS AND JONATHAN PAUL NICHOLS

NSD 541 OF 2006

EMMETT J

8 FEBRUARY 2008

SYDNEY

THE COURT ORDERS THAT:

1.                  The costs of the motion of 8 January 2008 be treated as the costs of the motion as referred to in paragraph 2 of the Order of 22 August 2006.

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

REASONS FOR JUDGMENT

1                     On 22 August 2006, after hearing argument, I made an order that the respondent pay all reasonable costs of the applicant reasonably incurred up to 23 June 2006.  I then made consequential orders in relation to the costs of the motion that I was hearing.  Some misunderstanding has subsequently arisen concerning the intent and effect of my order. 

2                     On 16 November 2006, a deputy registrar of the Court wrote to the plaintiff’s solicitors indicating that, in his view, the order did not provide for a bill of costs to be prepared otherwise than in accordance with Schedule 2 of the Federal Court Rules.  The letter invited the plaintiff’s solicitors to file and serve an amended bill on that basis. 

3                     The bill of costs that had been filed by the plaintiff on 10 October 2006 had been prepared on the basis of stating all costs actually incurred by the plaintiff.  The defendants’ solicitors subsequently wrote to the deputy registrar on 18 December 2006, relevantly saying:

1.      Order 62 Rule 19 does not apply any label to the basis on which costs are payable but specifies the principle on which taxing officers must act when conducting a taxation.  Order 62 Rule 31 refers specifically to costs being taxed on a party and party basis.   The Federal Court Act and Rules make no express provision for costs to be taxed on an indemnity basis equivalent to e.g. section 98(1)(c) of the Civil Procedure Act of New South Wales.  Prima facie, therefore, any order for costs must be assumed to be taxed in accordance with order 62 Rule 19.

2.      It is true that Federal Court Act (sic) section 43(2) empowers the court to order costs to be paid on a basis other than as prescribed by Order 62 Rule 19 so that it is theoretically possible that in the present case Emmett J could have been intending to invent a new basis for the assessment of costs which differed from the prescription in Order 62 Rule 19.  However, it is highly unlikely that the Judge would do this without saying explicitly that this was his intention.  Furthermore, if the Judge was intending to invent a new basis for the assessment of costs unique for this case, he could be expected to indicate explicitly how this new basis of costs assessment differed from order 62 Rule 19.  In the absence of any explicit indication of an intention to invent a new basis of costs assessment and an indication of how this new basis of costs assessment differed from Order 62 Rule 19, it is to be concluded the Judge was not inventing a new basis of costs assessment.

On 29 January 2007, the deputy registrar wrote to the parties indicating that he accepted that submission. 

4                     The submission does not represent my intention and I am surprised that anybody who had been present at the hearing of the argument that gave rise to the order of 22 August 2006 would think so.  My intention was, in effect, to give the applicant costs on a solicitor-client basis.  That basis is normally more favourable than the party-party basis.  On the other hand, I was not intending that there would be a complete indemnity.  It has always been my understanding that there are three bases upon which costs might be assessed: 

(a)               the indemnity basis, which is the most favourable and is appropriate for a trustee, 

(b)               the party-party basis,  and

(c)               the solicitor-client basis, which involves a determination of whether the costs that have been charged were reasonably charged in the circumstances and also a consideration of whether the costs that were charged were in fact reasonable costs.

5                     It is this last basis, the solicitor-client basis, upon which I intended that the bill be assessed.  That is not a new basis for the assessment of costs unique for this proceeding.  It was simply intended to ensure that the applicant was not out of pocket.  On the other hand, it was not intended to require the respondent to pay costs that were charged to the applicant but which were unreasonable or excessive.  It does not seem to me that any further order is required.  The bill should be taxed on the basis that I have now indicated. 

Associate:

Dated:         28 February 2008