Federal Court of Australia

Mununggurr v Channel Seven Sydney Pty Ltd (No 2) [2022] FCA 999

ORDERS

THE COURT ORDERS THAT:

1.    The application for review of the certificate of taxation issued by the Registrar on 29 November 2021 be allowed in part.

2.    The certificate of taxation issued on 29 November 2021 be set aside.

3.    The Registrar issue a certificate of taxation in the amount of $272,077.50.

4.    The respondents pay the costs of the applicants relating to the hearing on 9 August 2022, fixed in the amount of $18,150.00 inclusive of GST.

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

REASONS FOR JUDGMENT

(Revised from the Transcript)

RARES J:

1    This is an application that the Court not adopt the report of the referee, Tony Tesoriero, that reviewed the taxation of the applicants’ costs by a Registrar of the Court (the taxing officer). The referee is a former Registrar of the Court, having served in that capacity for nearly 20 years, with considerable experience in taxation of costs.

2    I described the nature of this proceeding in approving the settlement between the parties, six of whom were minors, in Mununggurr v Channel Seven Sydney Pty Ltd [2019] FCA 2188 at [1]–[4] as follows:

1    The applicants are nine adults and six children, aged between five and nine, each of whom is represented by a litigation guardian. They commenced this proceeding against the two respondents, which are the producer and broadcaster of a television program, Sunrise on the Channel Seven network. Sunrise is broadcast daily throughout the Commonwealth. The applicants sought damages on a variety of causes of action against Channel Seven.

2    Channel Seven published the matter complained of on or about 13 March 2018 in which it showed background, pixelated footage of an Aboriginal community, of which each of the applicants was a member. They alleged that that footage depicted them in a form recognisable to viewers in connection with a story or segment titled, “Aboriginal Adoption, Proposal for White Families Should Take in Abused Kids”. The applicants contended that the matter complained of conveyed a number of defamatory imputations of and concerning each of them. They also alleged that the broadcast gave rise to a variety of other causes of action, including breaches of the Racial Discrimination Act 1975 (Cth), breaches of confidence and misleading or deceptive conduct under the Australian Consumer Law in Sch 2 of the Competition and Consumer Act 2010 (Cth). In essence, the applicants complained that the publication suggested that, in one way or another, they had some connection to the issues of child abuse in the subject matter of the broadcast, which was not the case.

3    On 3 July 2019, I ordered the parties to attend a private mediation and set the proceeding down for a three-week hearing commencing on 14 April 2020 on country at Nhulunbuy in the Northern Territory, or such other place as may be directed, being the area in which the applicants live. In the event, the parties attended at a mediation conducted by the Honourable Stan Jones QC and reached a resolution of this proceeding in a confidential settlement. The parties agreed that they would enter into a deed, the terms of which have now been agreed and reduced to writing. The terms of the settlement will resolve, among all the other claims, those of the children who will receive a settlement sum and an apology subject to the Court exercising its power to approve it under rr 9.70 and 9.71 of the Federal Court Rules 2011.

4    The applicants’ solicitor, Stewart O’Connell, in his affidavit, affirmed on 11 December 2019, explained the circumstances of the applicants, including the children and their litigation guardians in the settlement negotiations and he annexed a written opinion of counsel for the applicants dated 22 October 2019 as to the appropriateness of the settlement for the children.

(emphasis as in original)

3    Part of the settlement included that the applicants would file, as they did on 2 March 2020, a notice of discontinuance containing a consent order that the respondents (Channel 7) pay their costs as agreed or taxed.

The relevant provisions of the Rules

4    Rule 40.31 of the Federal Court Rules 2011 provides:

If a party wants a fee, allowance or disbursement that may be allowed in the taxing officer’s discretion, the taxing officer may have regard to the following:

(a)    the nature and importance of the proceeding;

(b)    the amount of the claim;

(c)    the damages, if any, awarded;

(d)     the principle involved;

(e)    the conduct and cost of the proceeding;

(f)     other fees and allowances claimed by the party’s lawyers;

(g)    any other relevant circumstance.

(emphasis added)

5    Schedule 3 to the Rules provides, relevantly:

1.1 Attendances by a lawyer requiring the skill of a lawyer (including attendances in conference, by telephone, on counsel, appearing in court, instructing in court and travelling), for each unit of 6 minutes a sum in all circumstances not exceeding $65.

(a)     having regard to the lawyer’s skill and experience; and

(b)     having regard to the complexity of the matter or the difficulty or novelty of the questions involved.

…

11.1 An additional amount may be allowed, having regard to all the circumstances of the case, including the following:

(a)    the complexity of the matter;

(b)    the difficulty or novelty of the questions involved in the matter;

(c)    the skill, specialised knowledge and responsibility involved and the time and labour expended by the lawyer;

(d)    the number and importance of the documents prepared and read, regardless of their length;

(e)    the amount or value of money or property involved;

(f)    research and consideration of questions of law and fact;

(g)    the general care and conduct of the lawyer, having regard to the lawyer’s instructions and all relevant circumstances;

(h)    the time within which the work was required to be done;

(i)    allowances otherwise made in accordance with this scale (including any allowances for attendances in accordance with item 1.1); and

(j)    any other relevant matter.

The taxation

6    In accordance with the consent costs order, on 29 November 2021, after a hearing and taking evidence, the taxing officer issued a certificate of taxation pursuant to r 40.27. She certified the applicants’ costs in the amount of $238,603.47 less Channel 7’s costs of the taxation fixed in the sum of $23,000.

7    The applicants challenged before the referee and, again, in opposing the adoption of his report, three items that the taxing officer taxed off, namely:

    $15,491, as a result of reducing, under item 1.1 in Sch 3, the hourly rate of fees charged by the applicants’ solicitor, Stewart O’Connell, from $600 to $550,

    $28,600, as a result of disallowing, in their entirety, fees in respect of the costs of Peter O’Brien, another solicitor employed by the applicants’ solicitors, for attendance on country in the Northern Territory at the mediation and to take statements there, together with Mr O’Connell and two junior counsel, Louise Goodchild and Therese Catanzariti, and a clerk from Mr O’Connell’s firm, and

    an allowance on their total costs of 5%, instead of 10% as claimed, in respect of an uplift for the applicants’ solicitors’ skill, care and responsibility, under item 11.1 in Sch 3.

The contested bill of costs claim

8    The narrative in the bill of costs for Mr O’Brien’s relevant attendances, apart from his travelling and accommodation disbursements, comprised:

    “attending conferences with applicants and witnesses taking statements and instructions in preparation for mediation and explaining mediation process to applicants – 8 hours” for two days, being 17 and 18 September 2019,

    “attending mediation in related conference with counsel and applicants – 8 hours” for 19 September 2019, and

    on 20 September 2019, “attending conference with the applicants going through draft settlement deed received from respondent’s solicitor (15 pages) advising and taking instructions re draft deed and further conduct of proceedings – 3 hours”.

9    Identical claims were made in respect of Mr O’Connell’s attendances on the same occasions.

10    Channel 7’s objection to the bill of costs in respect of the charges for Mr O’Brien’s attendances on country for the mediation was that it was “unreasonable for second solicitor to attend where counsel in attendance and instructing solicitor has benefit of assistance of clerk”.

The taxing officer’s decisions

11    Importantly, the taxing officer found that the proceeding posed complex and novel questions and that taking instructions from indigenous clients in remote circumstances presented unique challenges, which she took into account in determining what was fair and reasonable in the circumstances of the case for the purposes of certifying the taxed costs of the applicant. She found the following on the three issues in dispute.

12    First, she found that Mr O’Connell and Ms Goodchild were each uniquely qualified to conduct litigation such as this and brought with them a wealth of experience. She was not satisfied that the maximum charge-out rate of $600 per hour for Mr O’Connell, prescribed in item 1.1 of Sch 3, was appropriate. She found that the fair and reasonable fee for the work done by Mr O’Connell was $550 per hour inclusive of GST, saying:

The main reason for this is the manner in which Mr O’Connell and Ms Goodchild worked together in this proceeding. It is apparent from the time recorded, the narration of that time, the email correspondence on the file and the submissions made, that Mr O’Connell and Ms Goodchild worked as a team and that neither could have taken the matter to resolution without the other. Ms Goodchild’s hourly fee in this matter was $550 per hour (inclusive of GST) and I am of the view that it is appropriate for that amount to be allowed in relation to Ms Goodchild and Mr O’Connell’s fees to be at that rate also. The rate of $550 per hour is appropriate for the entirety of the matter, with no distinction as to date (ie. before or after 1 May 2019). References to “at the reduced rate” in my rulings are to $550 per hour.

13    Secondly, the taxing officer found the following in relation to Mr O’Brien’s fees and disbursements:

I accept that any charge out rate allowed in respect of Mr O’Brien should be the same as that of Mr O’Connell. However, other than in relation to the travel to Yirrkala where Mr O’Connell was unable to attend, no allowance should be made for Mr O’Brien’s fees and travel disbursements or for Mr O’Brien’s attendance at the mediation. In the circumstances of the matter, it is not fair and reasonable for the respondent to bear the disbursements of Mr O’Brien’s travel to Yirrkala in May 2018. Given the number of legal representatives that travelled for the mediation, Mr O’Brien’s apparent limited involvement in the proceeding and the level of support on the ground in Yirrkala, both logistically and through interpreters, this is not a cost the respondent should be expected to bear either.

(emphasis added)

14    Thirdly, the Court’s Guide to Discretionary Items in Bills of Costs, effective from 1 October 2014, provided that a range of 0 to 15% was commonly allowed for item 11.1 in Sch 3 of the Rules. The taxing officer reduced, to 5% of their professional costs, the applicants’ solicitors’ claim under item 11.1 in Sch 3 for an additional 10% to reflect the complexity of the matter and the unique skills of the practitioners. She accepted the submissions of Channel 7 that the matter settled early and the applicants’ solicitors had placed significant reliance on counsel.

15    On 17 February 2022, I ordered that the application for the review of the taxation be referred to Mr Tesoriero as referee and required him to report in accordance with r 28.66.

16    On 24 May 2022, the referee reported. He concluded that the taxing officer’s certification of costs should be affirmed.

The referee’s report

17    The referee set out the principles for the Court’s exercise of its powers on a review of a taxation of costs under r 40.34. He correctly stated the principles, drawing on the decision of Edelman J, in Cassimatis v Australian Securities and Investments Commission (2016) 334 ALR 350 at 353–355 [7]–[16], which contained a comprehensive review of those principles. There is no suggestion that the referee misapprehended the nature of the review. He referred to Kitto J’s adoption, in Australian Coal and Shale Employees’ Federation v The Commonwealth (1953) 94 CLR 621 at 628–629, of the approach in Schweppes Limited v Archer (1934) 34 SR (NSW) 178 at 183–184 of Jordan CJ, with whom Harvey CJ in Eq and Street J agreed, namely:

In appeals as to costs, the principles to be applied are these. The Court will always review a decision of a Taxing Officer where it is contended that he has proceeded upon a wrong principle, for the purpose of determining the principle which should be applied; and an error in principle may occur in determining whether an item should be allowed and in determining how much should be allowed. Where no principle is involved, and the question is, whether the Taxing Officer has correctly exercised a discretion which he possesses and is purporting to exercise, the Court is reluctant to interfere. It has undoubted jurisdiction to review the Taxing Officer’s decision even where an exercise of discretion only is involved, and will do so freely on a proper case, using its own knowledge of the circumstances: Western Australian Bank v Royal Insurance Co (7 CLR at 388); Clark, Tait & Co v Federal Commissioner of Taxation (47 CLR 142 at 145–6), but it will in general interfere only where the discretion appears not to have been exercised at all, or to have been exercised in a manner which is manifestly wrong; and where the question is one of amount only, will do so only in an extreme case.

(emphasis added)

18    The referee, of course, was standing in the shoes of the Court in conducting the reference. He had before him the transcript of the hearing on the taxation which included the evidence given by Mr O’Connell and the submissions made by both parties.

19    First, the referee found that the taxing officer had arrived at her findings of fact based on the items in the bill of costs and the other evidence before her about the teamwork of Mr O’Connell and Ms Goodchild. That formed the basis of the taxing officer’s assessment that $550 was a fair and reasonable fee for Mr O’Connell’s hourly rate. The referee concluded that the taxing officer had not adopted any wrong principle in arriving at that conclusion and he did not consider there was any manifest error in her selection of the $550 hourly rate for Mr O’Connell. Indeed, he found that the taxing officer considered the correct issues in exercising her discretion and had a proper basis for her decision that the value of the work performed by Mr O’Connell equated to that of Ms Goodchild. The referee found that it was fair and reasonable that their hourly rates be equal, and accordingly, determined not to interfere with the taxing officer’s discretionary decision.

20    Secondly, the referee considered that, having regard to the taxing officer’s reasons, her decision not to allow any of the disputed fees and disbursements of Mr O’Brien attending the mediation was within her discretion under rr 40.30 and 40.31. He found that there was nothing to indicate that the taxing officer had adopted a wrong principle or that the exercise of her discretion was manifestly wrong, in the sense that Edelman J explained in Cassimatis 334 ALR at 354 [14]–[15] adopting Jordan CJ’s approach in Schweppes 34 SR (NSW) at 183–184. Accordingly, the referee decided not to intervene.

21    Thirdly, the referee noted that in selecting the allowance of 5% in relation to skill, care and responsibility for the solicitors’ fees, the range that the Court’s guide indicated as generally allowable under item 11.1 in Sch 3 was between 0 and 15%. He noted that the taxing officer had had regard to the complexity and uniqueness of the issues in the proceeding, when she reduced the applicants’ entitlement to 5%. In the circumstances, he was unable to identify that the taxing officer had adopted a wrong principle, or that her exercise of discretion to do so was manifestly wrong. Accordingly, he decided not to interfere with the decision.

Principles on the adoption of a referee’s report

22    In approaching the question whether a referee’s report should, or should not, be adopted in whole or in part under r 28.67, the Court applies well-settled principles. McDougall J set these out in a much-cited, but curiously, unreported decision: Chocolate Factory Apartments Ltd v Westpoint Finance Pty Ltd [2005] NSWSC 784 at [6]–[8]. In Sheehan v Lloyds Names Munich Re Syndicate Ltd [2017] FCA 1340, the Chief Justice rehearsed those principles in his reasons at [9]–[12], saying (at [10]):

Once a referee’s report is provided to the Court, the Court will then hold an adoption hearing if adoption of the report is contested. The principles regarding the adoption of a referee’s report, albeit within the context of the Supreme Court Rules 1970 (NSW), were distilled succinctly, but comprehensively, by McDougall J in Seven Sydney Pty Ltd v Fuji Xerox Australia Pty Ltd [2004] NSWSC 902 at [12]. They include that a Court should be reluctant to allow factual issues determined by a referee to be argued afresh in Court: Seven Sydney [2004] NSWSC 902 at [12] per McDougall J; Chocolate Factory Apartments Ltd v Westpoint Finance Pty Ltd [2005] NSWSC 784 at [7] per McDougall J. Some error of principle, absence or excess of jurisdiction or patent misapprehension of the evidence should generally be demonstrated to justify the rejection of the referee’s report: Super v SJP Formwork 29 NSWLR at 563. The Court will generally not reconsider disputed questions of fact where there exists factual material that is sufficient to entitle the referee to reach the conclusions that he or she did, particularly where the disputed conclusions are made in a technical area in which the referee possesses appropriate expertise: Seven Sydney [2004] NSWSC 902 at [12] per McDougall J. Furthermore, the discretion to reconsider a referee’s factual findings will generally only be exercised if the findings are such that no reasonable finder of fact could have made that finding: Franks v Berem Constructions Pty Ltd [1998] NSWCA 87 at 11 per Hodgson CJ in Eq. However, the determination of questions of law and the application of legal principles to facts found by the referee is a matter for the Court: Homebush Abbattoir Corporation v Bermria Pty Ltd (1991) 22 NSWLR 605 at 609; Super v SJP Formwork 29 NSWLR at 563; and Seven Sydney [2004] NSWSC 902 at [12].

The parties’ submissions

23    The applicants challenge the referee’s report on two principal bases. They contend that, first, it was illogical or an error of principle, for the referee to determine that the taxing officer had not erred in finding that there was an equivalence in the worth of the work performed by Ms Goodchild as counsel, who charged an hourly rate of $550, and Mr O’Connell, so as to reduce his rate from $600 to $550 per hour and, secondly, the referee erred in finding no reason to interfere with the taxing officer’s conclusion that no allowance whatsoever should be given for Mr O’Brien’s work. They also challenged the reduction to 5% for the allowance under item 11.1 in Sch 3.

24    First, the applicants argued that the referee erred in failing to conclude that the selection of a $550 per hour hourly rate for Mr O’Connell was illogical or was based on an irrelevant consideration, because counsel’s fees and solicitors’ rates were hardly equivalents. They contended that the task was not to equate the work of counsel and the solicitors, but to recognise that each performed different roles and charged for their work on different bases. They submitted that there was no logical connection between the rates allowable to counsel, which the Court published in the National Guide to Counsel Fees, effective from 1 July 2013, and the rates allowable for solicitors under Sch 3 of the Rules, in item 11.1.

25    Secondly, Channel 7 argued that the referee’s adoption of the taxing officer’s rejection of any amount for Mr O’Brien’s attendance at the mediation was a discretionary judgment in respect of which no error had been identified. It pointed to the fact that, at the mediation, there were two junior counsel, Ms Goodchild and Ms Catanzariti, Mr O’Connell, a clerk, as well as Mr O’Brien. It contended that it was not necessary for Mr O’Brien to attend.

26    Both parties proceeded on the basis that resolution of those two issues would inform whether a different allowance should be awarded under item 11.1 in Sch 3.

Consideration

The rates issue

27    I am mindful that both the taxing officer and the referee have considerable experience in the taxation of costs in this Court and of the rates that ought be allowed as fair and reasonable in matters the subject of costs estimates and taxations.

28    The referee concluded that the taxing officer had made no error of principle in selecting an hourly rate for Mr O’Connell’s work based on the equivalence of its value to the mutual clients, being the applicants, with that of leading junior counsel, Ms Goodchild. The evaluation of a fair and reasonable charge in all of the circumstances involves the exercise of a taxing officer’s discretion and the detection of any error in the exercise of that discretion is governed by the principles in House v The King (1936) 55 CLR 499 at 504–505 per Dixon, Evatt and McTiernan JJ.

29    The taxing officer did not disallow Mr O’Connell’s hourly rate under r 40.30(b). Rather, she exercised her discretion in accordance with r 40.31 not to allow Mr O’Connell’s hourly rate at the full amount in item 1.1 in Sch 3. While other taxing officers may have exercised the discretion differently, the referee did not see any error of principle. In particular, the taxing officer was entitled to have regard, as she did, in the exercise of her discretion under r 40.31(f), to other fees and allowances claimed by the parties’ lawyers. In the circumstances, I am unable to find that the taxing officer erred in principle in having regard to Ms Goodchild’s charge out rates in arriving at an appropriate rate for Mr O’Connell.

30    Therefore, there is no occasion to interfere in the exercise of the referee’s decision not to interfere in the exercise of the taxing officer’s discretion: Schweppes 34 SR (NSW) at 183. In those circumstances, there is no basis on which the Court can find that the referee erred in this respect.

Mr O’Brien’s role

31    However, in relation to determining that no allowance should be given for Mr O’Brien’s fees and disbursements in relation to his attendance at the mediation, I am satisfied that the referee erred, as did the taxing officer.

32    First, it is impossible to understand how the taxing officer could have found that the whole of Mr O’Brien’s attendance on country at the time of the mediation was worthless. Yet, no allowance at all was made for any of the work he did, including the taking of statements which, had Mr O’Brien not done that work, would have involved time and skill of another of the lawyers. There were nine adult and six infant applicants, almost all of whom spoke their own language as a first language and not English. That meant that the applicants’ lawyers would need to give advice to the infants’ parents and family groups, have that translated together with their questions and statements, and also elicit statements of evidence. This would involve input not just from the applicants themselves but also those who cared for them and other witnesses who could speak of the impacts of the alleged wrongful publication of the confidential footage on the Sunrise program.

33    There was no material before the taxing officer to suggest that Mr O’Brien’s attendance was entirely worthless, yet she determined to disallow every part of the fees claimed for his attendance. She had accepted that his charge-out rate in respect of a different occasion should be the same as Mr O’Connell’s. That had occurred in May 2018, when he had attended on country because Mr O’Connell was then unavailable.

34    In my opinion and experience of native title litigation, the efficient preparation for and presentation of the applicants’ case, including at a mediation, and the taking of statements for the purposes of the scheduled hearing in April 2020, were there not to be a settlement, warranted a second solicitor to attend on country at the time of the mediation.

35    The taxing officer’s failure to attribute any value to any of the work done by Mr O’Brien was an error of principle. There were, at least, 15 individual clients, and probably more witnesses. Those persons were not just the next friends of the six infant applicants, but would also have included family members and others to whom matters had to be explained individually, including for the purposes of solicitors being able to satisfy themselves that a client understood what was proposed in the negotiations for settlement and the ultimate settlement that was reached, together with the task of taking statements from potential witnesses. Those circumstances justified the involvement of a second solicitor.

36    I am of opinion that the taxing officer’s and the referee’s failure to give any consideration to the work that Mr O’Brien did in September 2019 on country was a failure to take into account a relevant consideration and that, accordingly, the taxing officer’s discretion miscarried: House 55 CLR at 505. The referee erred in not finding that she had proceeded on a wrong principle.

37    I am satisfied that, in the circumstances, Mr O’Brien’s attendance at the mediation was appropriate and given the taxing officer’s earlier approval of his charge out rate, the charges were fair and reasonable and should be allowed.

Allowance for skill, care and responsibility

38    Because I have determined that the referee’s report should not be adopted in respect of Mr O’Brien’s fees, the selection of a percentage allowance in relation to skill, care and responsibility under item 11.1 in Sch 3 for the applicants’ solicitors must be reconsidered afresh.

39    As the referee noted, the Court’s Guide provides a range of 0 to 15% as being commonly allowed for item 11.1. I have had regard to the taxing officer’s selection of 5% and the referee’s decision that this was within her discretion. However, because of the error I have found in relation to the disallowance of Mr O’Brien’s fees and disbursements, I am not bound by the taxing officer’s assessment.

40    In my opinion, having regard to the considerations in item 11.1, 7.5% on the bill should be allowed.

Conclusion

41    The parties should bring in draft orders to give effect to these reasons.

Associate:

Dated:    26 August 2022

SCHEDULE OF PARTIES