FEDERAL COURT OF AUSTRALIA

Soden v Croker (No 3) [2016] FCA 249

ORDERS

THE COURT ORDERS THAT:

1.    The respondent pay the applicant’s costs fixed in the sum of $55,000.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

PERRY J:

1.    INTRODUCTION

1    By an application filed on 24 December 2014 (as amended on 11 February 2015), the applicant sought an order pursuant to s 37AO(2)(b) of the Federal Court of Australia Act 1976 (Cth) (the FCA Act) prohibiting the respondent, Mr Clayton Robert Croker, from instituting any proceedings in the Federal Court without prior leave of the Court. That application was wholly successful, with the Court making an order on 27 January 2016 in the terms sought in the application (as amended): see Soden v Croker (No 2) [2016] FCA 15 (Croker (No 2)). In this regard, I note that the applicant did not press an order staying other proceedings in the Federal Court for the reason that no such proceedings were on foot. The question of costs was reserved, as foreshadowed at the hearing, and orders were made also on 27 January 2016 for the parties to file any affidavit evidence and short written submissions on which they sought to rely on the issue of costs. Subject to the parties communicating any objection by 4 March 2016, the orders provided for the issue of costs to be determined on the papers. No objection was communicated and accordingly I have resolved the issue without a further hearing.

2    The applicant filed written submissions in accordance with the orders seeking its costs on the basis of the ordinary rule that costs should follow the event. The applicant also seeks an order that costs be fixed in the sum of $55,000 pursuant to r 40.02(b) of the Federal Court Rules 2011 (Cth) (the Rules). In support of this, the applicant relies upon the affidavit of Mr Michael Gregory Abood, a solicitor having carriage of the matter on behalf of the applicant, affirmed on 10 February 2016. Reliance was also placed on the judgment of Driver FM (as his Honour was then known) in Commonwealth v Croker [2010] FMCA 852 in which his Honour made a sequestration order against the estate of Mr Croker, the date of the act of bankruptcy being 22 September 2010. That bankruptcy was founded upon six separate costs orders relating to various proceedings in the Federal Magistrates Court, the Federal Court and the Supreme and District Courts of New South Wales, the total amount listed as owing in the bankruptcy notice being $51,705.61.

3    No written submissions or affidavit evidence was filed by Mr Croker in response, notwithstanding that the orders made on 27 January 2016 allowed Mr Croker a period of two weeks within which to provide any such material. It follows that Mr Croker did not take issue with the evidence on which the applicant relied in support of the costs order sought.

2.    CONSIDERATION

2.1    Should an order be made awarding the applicant his costs?

4    The power to award costs is conferred by s 43(2) of the FCA Act which relevantly provides:

… the award of costs is in the discretion of the Court or Judge.

5    While the question of costs is a matter for the Court’s discretion, the general rule is that a successful party is entitled to its costs: Ruddock v Vadarlis (No 2) [2001] FCA 1865; (2001) 115 FCR 229 at 234-235 [11] (Black CJ and French J); Scott v Secretary, Department of Social Security (No 2) [2000] FCA 1450 at [2] (Beaumont and French JJ). The applicant was successful and there is no reason why the applicant should be deprived of his costs.

2.2    Fixed or lump sum award of costs

2.2.1    Relevant principles

6    Rule 40.02 of the Rules provides that:

A party or a person who is entitled to costs may apply to the court for an order that costs:

(a)    awarded in their favour be paid other than as between party and party; or

(b)    be awarded in a lump sum, instead of, or in addition to, any taxed costs; or

(c)    be determined otherwise than by taxation.

7    The discretion to order costs as a lump sum must be exercised judicially and only after giving the parties an adequate opportunity to make submissions on the matter: Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 120 (von Doussa J) (Beach Petroleum); Julien v Secretary, Department of Employment and Workplace Relations (No 2) [2009] FCA 1259 (Julien) at [9] (Spender J). I am satisfied that the orders made on 27 January 2016 afforded Mr Croker an adequate opportunity to make submissions in response to the applicant’s position which was clearly set out and explained in the applicant’s written submissions and to file any evidence which he wished in response to Mr Abood’s affidavit: see above at [2].

8    As the applicant submitted, the discretion to award a lump sum may be exercised where the Court is of the view it will avoid the expense, delay and protraction of litigation arising out of a taxation, whether the case be a complex or simple one: Ginos Engineers Pty Ltd v Autodesk Australia Pty Ltd [2008] FCA 1051 (Ginos) at [22] (Finn J); Beach Petroleum at 120. Furthermore, in making a lump sum estimate, the Court must be satisfied that it is “logical, fair and reasonable”: Ginos at [23]; Beach Petroleum at 123. As von Doussa J explained in Beach Petroleum at 123:

On the one hand the Court must be astute to prevent prejudice to the respondents by over estimating the cost, and on the other hand must be astute not to cause an injustice to the successful party by an arbitrary ‘fail safe’ discount on the cost estimates submitted to the Court....

9    Nonetheless, it is inconsistent with the terms of r 40.02 and the object in making lump-sum orders that the costs in issue be subjected to the detailed scrutiny often applied in taxations: Ginos at [23]. Rather, as Finn J held in Ginos, “[i]n specifying a lump sum, it is well accepted that it is appropriate to apply a ‘much broader brush’ than would be applied on a taxation” (ibid).

10    Examples of circumstances resulting in such an award were conveniently summarised by the applicant as including:

7.1    Where a taxation process was expected to be particularly complex (eg Beach Petroleum);

7.2    Where a party has shown a tendency not to comply with costs orders (Salfinger v Niugini Minister (Aust) Pty Ltd (No 5) [2008] FCA 1119);

7.3     Where a taxation process would be disproportionately expensive to the award of costs (Cameron v Secretary, Department of Human Services (No 2) [2015] FCA 1201); and

7.4    Where the financial circumstances of the parties would lead one to conclude that the costs were unlikely to be recovered (Julien; Hadid [v Lenfest Communication Inc [2000] FCA 481]).    

2.2.2    Should costs be awarded in a lump sum?

11    I am satisfied that this is an appropriate case in which to make an order awarding costs in a lump sum fixed in the amount of $55,000.

12    First, I found at [221] of Croker (No 2) that Mr Croker’s litigation history “reveals a discernible pattern of unpaid costs orders” and agreed with Fullerton J in Attorney-General (NSW) v Croker [2010] NSWSC 942 at [134] that “to cause others to incur legal costs in responding to hopeless applications, in circumstances where [Mr Croker] has blithely disregarded costs orders made against him is also an abuse of the courts’ processes”. Furthermore, searches undertaken on the applicant’s behalf establish that as at 27 January 2016, Mr Croker was an undischarged bankrupt and, as earlier mentioned, that bankruptcy was founded upon six unpaid costs orders in various proceedings and jurisdictions. No evidence was led by Mr Croker that his bankruptcy had been discharged subsequently. In these circumstances and in particular given Mr Croker’s past record of non-compliance with costs orders, I accept the applicant’s submission that it is likely that engaging in a taxation of the applicant’s costs would merely result in further costs being incurred in circumstances where they are unlikely to be recovered.

13    Secondly, I accept the applicant’s submission that Mr Croker’s tendency to pursue unmeritorious claims, even when fundamental difficulties with them are drawn to his attention early in proceedings, raises the “distinct possibility”, if not the probability, that “the taxation process could be abused in a way that would be disproportionately burdensome when compared to the quantum being sought.” Relevantly in this regard, I found at [229] in Croker (No 2) that Mr Croker’s past litigation history “demonstrates a relentless series of vexatious proceedings over a lengthy period”, that he continued to demonstrate a complete lack of insight into the vexatious nature of his conduct in the manner in which he sought to defend these proceedings and that he was likely to continue to persist in vexatious litigation which is oppressive for respondents.

14    Thirdly, I accept the applicant’s submission that a taxation of costs would lead to unnecessary further expense in circumstances where the applicant is willing to accept substantive reductions on amounts that may otherwise be recoverable under a taxation. In this regard, as at the date of Mr Abood’s affidavit the applicant’s solicitor client costs, being the actual costs incurred by the applicant as at 31 January 2016, amounted to $72,080.86 exclusive of GST (being comprised of professional fees in the sum of $48,494.57 and disbursements, including counsel’s fees, of $23,586.29). As against this, the applicant seeks a lump sum costs order for $55,000 being 76% of the solicitor client costs. In this regard, notwithstanding the fact that the hearing of the vexatious proceedings application was confined to a single day, the application involved the compilation and review of a very substantial body of material arising from both state and federal jurisdictions over a period of 15 years, as Mr Abood deposed and as is apparent from the number of proceedings required to be considered in Croker (No 2).

15    In these circumstances, I am satisfied that it is “logical, fair and reasonable” to make the orders sought by the applicant, including as to the quantum of costs sought.

3.    CONCLUSION

16    For these reasons, Mr Croker should pay the applicant’s costs fixed in the sum of $55,000.

Associate:

Dated:    16 March 2016