FEDERAL COURT OF AUSTRALIA

Frigger v Kitay (Liquidator) (No 3) [2020] FCA 861

ORDERS

THE COURT ORDERS THAT:

1.    The defendant's application for orders for costs to be assessed on a lump sum basis be allowed.

2.    The plaintiff do pay the defendant's costs of the defendant's application for costs to be assessed on a lump sum basis.

3.    The costs ordered on 15 April 2020, 26 May 2020 and by order 2 of these orders are to be assessed on a lump sum basis if not agreed.

4.    If it is necessary to assess costs then:

(a)    the defendant may file and serve an affidavit constituting a Costs Summary in accordance with the Court's Cost Practice Note (GPN-COSTS);

(b)    within 14 days of service of the Costs Summary the plaintiff do file and serve any costs proposal in accordance with GPN-COSTS; and

(c)    if either party thereafter requests a determination of an appropriate lump sum figure then the matter shall be referred to a Registrar for determination of the lump sum on the papers and determination of the date by which the costs as assessed shall be payable.

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

REASONS FOR JUDGMENT

COLVIN J:

1    The substantive application by Mrs Frigger in these proceedings was dismissed. Pursuant to leave reserved to Mrs Frigger she applied unsuccessfully to vary the order as to costs on the substantive application. On each of 15 April 2020 and 26 May 2020, I made costs orders to the effect that Mrs Frigger do pay the defendant's costs of applications to be assessed if not agreed. The defendant, Mr Kitay acting in his capacity as liquidator of Computer Accounting & Tax Pty Ltd (in liq) now seeks orders to the effect that the costs be assessed on a lump sum basis by a Registrar, that the Registrar make that lump sum determination in such manner as the Registrar deems fit and that the costs are to be paid within 28 days of assessment by the Registrar.

2    For the following reasons there should be orders for the costs awarded in favour of Mr Kitay to be assessed on a lump sum basis, for the filing of a cost summary and response in accordance with the Court's Costs Practice Note and for a Registrar to determine on the papers the appropriate lump sum and the time for payment if the amount is not agreed.

3    The Court's Central Practice Note: National Court Framework and Case Management states that the quantum of costs for a successful party should not be delayed and that the Court will 'where appropriate, facilitate the making of lump-sum costs orders at the determination of, or as soon as possible after determination of, liability and quantum, with the assistance of registrars': at [17.1].

4    The principles to be applied in determining whether a lump sum order should be made and the quantification of those costs were summarised by Markovic J in LFDB v MS S M (No 2) [2018] FCA 2062 at [6]-[8]. The procedure to be applied must ensure that any assessment of costs is logical, fair and reasonable. As I said in Sandalwood Properties Ltd (Subject to a Deed of Company Arrangement) v Huntley Management Ltd (No 2) [2019] FCA 647 at [8]-[23], the procedure must enable a lump sum assessment to be undertaken (rather than a guess) and there must be a mechanism by which the Court can undertake a robust assessment of the reasonableness of the costs claimed. The Costs Practice Note provides information as to the form and content of an affidavit, compliance with which, in most instances, will facilitate such an assessment.

5    The present matter did not give rise to any unusual aspects that might require the modification of the procedure set out in the Costs Practice Note. It mainly involved legal argument. There is no reason to alter that procedure in the manner suggested by Mr Kitay, so that a Registrar undertaking the assessment may act as the Registrar deems fit. The procedure contemplated by the Costs Practice Note should be followed.

6    It is usual for lump sum assessments to be undertaken by Registrars of this Court and I am satisfied that the nature of the costs to be assessed in this case can be undertaken by a Registrar. There is no unusual aspect of the proceeding or the costs that might require the assessment to be undertaken by the judge who heard and determined the matter.

7    Mrs Frigger submits that there should be no change to the existing order as to costs which she submits requires costs to be assessed by taxation of a bill of costs. Two reasons are advanced to support that submission.

8    First, it is said that a Registrar has no power to make an order as to costs other than where the costs concern an application heard by the Registrar. Further, it is said that as the Registrar did not hear the proceeding the Registrar has no jurisdiction to assess costs in a lump sum. However, that submission is not to the point. What is sought by Mr Kitay is a further order by a judge of this Court providing for an assessment to be undertaken by a Registrar. If such an order is made, the Registrar will be acting under the authority of that order. Further, as I have already found, I am satisfied that it is appropriate for the assessment to be undertaken by a Registrar.

9    Second, it is said that as a costs order has been made there is no further authority to make an order for those costs to be assessed on a lump sum basis.

10    Section 43(3)(a) of the Federal Court of Australia Act 1976 (Cth) states that the Court may 'make an award of costs at any stage in a proceeding, whether before, during or after any hearing or trial'. Rule 40.02(b) of the Federal Court Rules 2011 (Cth) allows a party who is entitled to costs to apply to the Court for an order that costs be awarded in a lump sum, instead of, or in addition to, any taxed costs.

11    It has been held that lump sum costs orders may be made notwithstanding that previous orders may have already been made in relation to costs. In Beach Petroleum NL & Claremont Petroleum NL v Johnson (No 2) [1995] FCA 350; (1995) 57 FCR 119, von Doussa J referred to the equivalent rule of the previous Federal Court Rules and then said at [5]:

[T]he Court may exercise its powers and discretions as to costs at any stage of the proceedings, or after the conclusion of the proceedings. In my opinion the Court has power to make a gross sum order at this stage notwithstanding that costs orders were earlier made which envisaged taxation in the ordinary way.

12    Thereafter, an amendment was made to the previous Federal Court Rules which confirmed that costs orders could be varied 'at any time, whether or not an order that costs be paid to a person has previously been made or entered'. In Eat Media Pty Ltd v Mulready Media Pty Ltd (No 2) [2010] FCA 392 at [4], Flick J observed:

Rule 4(3) was inserted into the Federal Court Rules by way of Federal Court Rules (Amendment) 1998 (No 224). The Explanatory Statement provided at the time simply explained the reason for the amendment as follows:

… There has been some doubt as to whether once an order for costs has been entered the Court has power to set aside or vary it. The effect of this amendment is that the Court will be able to make an order that a specified gross sum be paid instead of tax [sic] costs even where an order for costs to be paid to a person has previously been made and entered.

That explanation confirms the existence of the power but says nothing as to the circumstances in which the discretionary power may be exercised.

13    Although the existing rule is not expressed in the same terms as the rule considered by Flick J, the decision in Beach Petroleum has been applied in cases where costs orders have been made under the current Rules. In Royal v El Ali (No 3) [2016] FCA 1573, Davies J stated that the power to make a lump sum costs order 'may be exercised whenever the particular circumstances of the case warrant it': at [10]. In Vantage Holdings Pty Ltd v Huang (No 2) [2015] FCA 185; (2015) 232 FCR 556, Collier J stated that the existing rule 'recognises that a party who is already entitled to costs may apply to the Court for an order that an existing costs order be varied': at [9] (original emphasis). In Australia and New Zealand Banking Group Ltd v Paciocco [2015] FCAFC 78 (Allsop CJ, Besanko and Middleton JJ), the Full Court made orders in relation to costs. In a later judgment in the same matter, the Full Court made orders to the effect that the costs orders made in the previous judgment be awarded on a lump sum basis: Paciocco v Australia and New Zealand Banking Group Ltd (No 2) [2017] FCAFC 146; (2017) 253 FCR 403.

14    Therefore, I am satisfied that there is authority to make the lump sum costs order that is sought by Mr Kitay.

15    Mr Kitay also sought an order that the costs be paid within 28 days of assessment. The issue of time for payment of costs was not raised by Mr Kitay when directions were made for submissions to be filed in support of his application for costs to be assessed on a lump sum basis. The issue has not been addressed by Mrs Frigger in her submissions. In those circumstances, I will make an order delegating to the Registrar the determination as to when the assessed costs must be paid.

Associate:

Dated:    19 June 2020