Federal Court of Australia

Watkins v Tatana [2023] FCA 248

ORDERS

THE COURT ORDERS THAT:

1.    Compliance with r 4.01(2) of the Federal Court Rules 2011 (Cth) be dispensed with.

2.    The proceeding be dismissed.

3.    The Applicants pay the Respondent’s costs fixed in the sum of $31,323.60.

4.    The Applicants pay that sum directly to Counsel who appeared pro bono for the Respondent, pursuant to r 4.19(3) of the Federal Court Rules 2011 (Cth).

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

REASONS FOR JUDGMENT

O’CALLAGHAN J:

1    In October 2021, the applicants, Mr Watkins and Block Traders Ltd, commenced a defamation proceeding against the respondent, Ms Tatana.

2    The applicants alleged that Ms Tatana had defamed them in an online review of the business conducted by Block Traders Ltd, called “The Holistic Trader”, of which Mr Watkins was the founder and CEO.

3    Mr Watkins was legally represented until 28 February 2022. Since that time he has been self-represented.

4    Ms Tatana was self-represented until about 5 February 2022, when Mr LJS Molesworth of counsel agreed to accept a brief that was provided to him from the secretariat of the Legal Assistance Referral Scheme of the Federal Court to act in this matter directly for Ms Tatana on a pro bono or conditional fee basis.

5    There is a long history of members of the Victorian Bar acting on a pro bono basis. As long ago as 1855, four members of counsel (Richard Ireland, Henry Chapman, Butler Aspinall and Joseph Dunne) appeared pro bono on behalf of a number of “diggers” who had been charged with high treason as a result of their involvement in what became known as the Eureka Stockade in Ballarat. They appeared pro bono at their jury trials, which took place in March 1855 before a’Beckett CJ. As Dr Peter Yule said in his work, VIC BAR: A History of the Victorian Bar (Australian Scholarly Publishing, 2022) at p 27 “[t]he successful defence of the Eureka accused made the reputations of several members of the young Victorian Bar …”

6    Nowadays, the Victorian Bar’s pro bono scheme is supervised by its Pro Bono Committee and administered by Justice Connect. I understand that well over 100 members of the Victorian Bar participate in that scheme each year. In addition to the pro bono work provided through that scheme, the Bar has referral schemes with the Supreme Court and Court of Appeal, the County Court, the Coroners Court, and the Federal Circuit and Family Court.

7    The pro bono contributions made by members of the Bar throughout the country, and of course also by many solicitors, play a critical role in assisting the courts in the administration of justice.

8    On 7 February 2022, Mr Molesworth provided a costs disclosure and conditional costs agreement to Ms Tatana, which she subsequently accepted by signing.

9    I made a series of procedural orders in the proceeding, many of which were necessitated by the applicants’ continued failure to comply with them.

10    On 26 November 2021, I made the following orders:

1.    The respondent file and serve her defence on or before 4pm on 7 February 2022.

2.    The applicants file and serve their reply on or before 4pm on 21 February 2022.

3.    The matter be listed for case management at 9:30am on 24 February 2022.

4.    Costs reserved.

5.    Liberty to apply.

11    On 7 February 2022, following Mr Molesworth agreeing to represent Ms Tatana, I made the following orders:

1.    Order 1 of the Orders of Justice O’Callaghan dated 26 November 2021 be vacated.

2.    The respondent file and serve an amended defence on or before 4pm on 11 February 2022.

12    On 24 February 2022, I made the following orders:

1.    By 4:00 pm on 10 March 2022, the Respondent file and serve Further and Better Particulars of the Amended Defence.

2.    By 4:00 pm on 24 March 2022, the Applicants file and serve any Reply to the Amended Defence.

3.    The matter is referred to mediation before a judicial registrar after 24 March 2022 on an estimate of half a day, on a date to be fixed.

4.    If the matter does not resolve at mediation, the matter be listed for a further case management hearing at a date to be determined by the Court.

5.    Liberty to apply.

6.    Costs reserved.

13    A mediation took place before a judicial registrar in accordance with order 3, but it was unsuccessful.

14    Following that, on 19 August 2022, I made the following orders:

1.    The matter be set down for hearing on 8 December 2022 in person at Melbourne on an estimate of 1 day.

2.    By 4.00 pm on 13 October 2022 the applicants file and serve any evidence upon which they propose to rely.

3.    By 4.00 pm on 27 October 2022 the respondent file and serve any evidence upon which she proposes to rely.

4.    By 4.00 pm on 10 November 2022 the applicants file and serve an outline of submissions on which they intend to rely.

5.    By 4.00 pm on 24 November 2022 the respondent file and serve an outline of submissions on which she intends to rely.

6.    The parties are to file and serve a joint trial bundle and joint bundle of authorities in electronic and hard copy form by 4.00 pm on 1 December 2022.

7.    Liberty to apply.

8.    Costs reserved.

15    On 16 November 2022, I made the following further orders:

1.    The trial set down for hearing on 8 December 2022 is vacated and set down for hearing on a date to be fixed after 1 March 2023.

2.    Orders 3 to 6 of the Orders made 19 August 2022 are set aside and in lieu thereof the following orders are made.

3.    By 4.00 pm on 30 December 2022 the applicants file and serve any further evidence upon which they propose to rely.

4.    By 4.00 pm on 13 January 2023 the respondent file and serve any evidence upon which she proposes to rely.

5.    By 4.00 pm on 27 January 2023 the applicants file and serve an outline of submissions on which they intend to rely.

6.    By 4.00 pm on 10 February 2023 the respondent file and serve an outline of submissions on which she intends to rely.

7.    The parties are to file and serve a joint trial bundle and joint bundle of authorities in electronic and hard copy form by 4.00 pm on 17 February 2023.

8.    Liberty to apply.

9.    Costs reserved.

16    To the extent that any of those orders required Mr Watkins and the second applicant to do anything, they did not do those things.

17    On 10 February 2023, less than three weeks before the trial was to commence, Mr Watkins sent an email to my associate requesting the court to dismiss the proceeding “with a zero costs award order”.

18    The 10 February email was sent from an email address described as belonging to “The Holistic Trader”, which is described in the particulars to [7] of the statement of claim filed on 18 October 2021 as “the name of the second applicant”.

19    I take the request to dismiss the proceeding contained in the 10 February email as one made on behalf of both applicants. That is the only logical way to read the email, including because it comes from the email address belonging to the second applicant, and because the statement of claim pleads that Mr Watkins is the founder and CEO of the second applicant, and is thus to be taken as its guiding mind.

20    Rule 4.01(2) of the Federal Court Rules 2011 (Cth) provides that “[a] corporation must not proceed in the Court other than by a lawyer”. But there is power to dispense compliance with that rule. See r 1.34. This is an obvious case to dispense with compliance, including because Mr Watkins has authority to act for the second applicant and no other possible factor would weigh against the dispensation. Compare, by way of example only, Worldwide Enterprises Pty Ltd v Silberman (2010) 26 VR 595 at 601 (Weinberg JA, with whom Bongiorno JA agreed).

21    The 10 February email, omitting formal and irrelevant parts, was in these terms:

I am writing to the court to seek permission to end my case against Miss Tatana … [as] it has come to light that Miss Tatana would not be in a position to pay any Judgement made against her in my upcoming defamation hearing in March.

Miss Tatana has no assets or property or any savings and for me to adequately prepare for this hearing requires me to pay a further $50,000 in legal fees to run my case.

I have come to the conclusion that it is pointless to try and pursue legal action against someone that is broke.

As such I am asking the court and Justice O’Callaghan to dismiss my case and award zero costs apart from the legal costs of those only incurred by each party to bear as their own as I’m aware I’m the only one incurring costs while Miss Tatana receives free legal representation.

… as such I wish to have my case summarily dismissed with a zero costs award order granted by the court.

22    The relevant gist of that email was that no order for the payment of costs should be made against Mr Watkins because:

(1)    he is impecunious; and

(2)    he was “the only one incurring costs while Miss Tatana receive[d] free legal representation”.

23    No particular costs related submission was advanced on behalf of the second applicant, and no assertions were made about its capacity or otherwise to meet a costs order.

24    Counsel responded in these terms in an email sent to my associate:

Dear Associate,

I have sought instructions in relation to the below matter.

1.    The respondent will not resist the proceeding being dismissed with no order as to costs.

2.    However, the respondent notes that it would be open for the Court to make some minor order as to costs if the Court were so minded, and submits that in the present circumstances it is appropriate to do so having regard to the following:

a.    The Federal Court pro bono legal assistance referral scheme provides that the Court “may order the other side to pay the Pro Bono lawyer’s fees” where appropriate. This clearly is intended to include where matters are improperly brought. (https://www.fedcourt.gov.au/going-to-court/i-am-a-party/help-with-legal-problem/court-referral-assistance)

b.    This matter should not have been brought, most self evidently in circumstances where the alleged defamatory post occurred prior to the second applicant even being incorporated (and in any event does not refer to or identify in any way the second applicant), and further the first applicant is also not named in the alleged post (save for a reference to a generic moniker), the relevant post relating to another business altogether. This proceeding, and the conduct of the applicants in the proceeding, has all the appearances of being brought to inappropriately exert pressure on the respondent.

c.    Significant work by pro bono counsel has gone into this matter in preparing evidence and submissions for trial, in addition to attending appearances and negotiations. Counsel costs of $44,750 inc GST have been incurred to date.

d.    The respondent has personally expended resources, including purchasing flights to attend trial on 8 December 2021, which the applicant sought shortly before trial to be adjourned in order to put on evidence and obtain representation to prepare submissions, none of which occurred.

e.    The applicants have elected not to put on any submissions or evidence in accordance with paragraphs 3, 5 and 7 of the Court’s 16 November 2022 programming orders, and have not been represented since February 2022.

f.    The applicants have taken no steps to prosecute this proceeding, save for paying the Court fee to have the matter set down for trial, putting the respondent to considerable stress and time cost, and wasting the pro bono resources of the Court.

g.    The assertion in the applicants’ email below of 10 February 2023 that they seek to abandon their claim because of the respondent’s impecuniosity should be rejected in circumstances where no evidence about the financial position of the respondent has been put on nor has there been any question asked of the respondent as to her financial position.

h.    In circumstances where the applicants have declined to comply with the Court’s orders but have waited until after the respondent has complied with the Court’s orders applicable to her as to evidence and submissions, it is not now appropriate that the applicants be permitted to withdraw without cost consequence of bringing, what the respondent submits, is a vexatious proceeding without proper basis which they have elected not to prosecute.

3.    With the above matters stated on the record, the respondent does not otherwise seek to be heard on the issue or seek to press the matter further and submits to the Court’s discretion.

25    At the court’s invitation, Mr Molesworth then swore an affidavit dated 22 February 2023, in which he deposed:

1.    I am a barrister and member of the Victorian Bar. I act for the respondent in this matter.

2.    I make this affidavit from my own knowledge.

3.    This affidavit is made in support of the respondent’s submission as to the appropriateness of a modest costs order to be made in her favour against the applicants.

4.    On 5 February 2022, I agreed to accept a brief that was provided to me from the secretariat of the Legal Assistance Referral Scheme of the Federal Court of Australia to act in a direct access matter for the respondent on a pro bono or conditional fee basis.

5.    On 7 February 2022, I provided a costs disclosure and conditional costs agreement (Cost Disclosure) to the respondent.

6.    On 7 February 2022, I received an email from the respondent attaching a copy of the Cost Disclosure, on which an electronic signature bearing the name of the respondent is shown.

7.    Annexed hereto and marked LM-1 is a copy of the signed Cost Disclosure dated 7 February 2022.

8.    Between 5 February 2022 and 10 February 2023, I recorded the time I spent providing legal services to the respondent in connection with this proceeding on the computer software known as TA Law, provided by my barristers’ clerk. Based on my standard hourly specialist commercial rate set out in the Cost Disclosure (which was my standard hourly rate as at February 2022), the legal costs incurred for the time I spent providing legal services to the respondent in this matter totals A$44,748 inc GST.

9.    On 22 February 2023, I caused my barristers’ clerk to issue a conditional fee slip to the respondent, which includes the narrations for the time I spent providing legal assistance to her in this proceeding during the period 5 February 2022 to 10 February 2023. The fee slip shows the total amount of legal costs conditionally owed to be A$44,748 inc GST.

10.    Annexed hereto and marked LM-2 is a copy of the conditional fee slip with narrations dated 22 February 2023.

26    Annexure LM-2 relevantly recorded the time Mr Molesworth spent providing legal services to Ms Tatana in connection with this proceeding, totalling $44,748, as follows:

    Total Payable                                $44,748.00

27    Rule 4.19 of the Federal Court Rules provides:

4.19 Professional fees

(1)    A Pro Bono lawyer must not seek or recover professional fees from an assisted party unless the Pro Bono lawyer and the assisted party have entered into a costs agreement.

(2)    The costs agreement must provide that the Pro Bono lawyer be entitled to charge and the assisted party is liable to pay professional fees only:

(a)    if an order for costs is made in favour of the assisted party; and

(b)    to the extent that the party against whom the order for costs is made in fact pays the costs.

(3)    If a costs agreement is entered into, the Court may order a party against whom an order for costs is made to pay the costs, including any disbursements incurred under rule 4.18, directly to the Pro Bono lawyer instead of the assisted party.

(4)    A payment made to the Pro Bono lawyer under subrule (3) satisfies, to the extent of that payment, the order for costs made in favour of the assisted party.

28    The copy of the signed Cost Disclosure dated 7 February 2022 (Annexure LM-1) contained the terms referred to in subrule 4.19(2) of the Federal Court Rules.

29    In my view, it is appropriate to make an order that the applicants pay Ms Tatana’s costs of the proceeding and that they be ordered to pay those costs directly to counsel.

30    In Chancliff Holdings Pty Ltd v Bell [1999] FCA 1783, Lee J considered the question whether to make an order for costs in circumstances where the successful party received legal assistance under the then existing Federal Court pro bono scheme (Order 80 of the Federal Court Rules 1979 (Cth)).

31    His Honour made the following observations about the significance of one party to litigation receiving pro bono assistance:

5    Counsel for Chancliff, whilst acknowledging that any order for costs was in the Court’s discretion, submitted that no order for costs should be made. The nub of Chancliff’s argument was that if the Court had not made a direction that Ms Bell receive legal advice and be represented by a legal practitioner under the “pro bono” scheme under O 80, Chancliff would not have been exposed to a costs order in pursuing its petition for a sequestration order against Ms Bell. Put another way, Chancliff contends that Ms Bell carried no financial risk in the litigation and equity requires that Chancliff should not be required to pay the costs of litigation in which it failed to obtain the orders it sought.

6    Counsel for Ms Bell submitted that a costs order would have been made in her favour to indemnify her for the costs incurred if she had engaged a legal practitioner to act on her behalf and, therefore, an appropriate order should be made in this matter under O 80 r 9.

7    If litigation is commenced against a party who does not have sufficient means to retain a legal practitioner that circumstance is not a valuable right held by the party prosecuting the litigation. If the respondent in such litigation obtains representation under a legal aid scheme, or assistance from a legal practitioner under a “pro bono” scheme, the party instituting litigation may, thereafter, incur a liability to pay costs the practitioner may be entitled to recover pursuant to the provisions of the legal aid, or “pro bono”, scheme.

8    That the respondent may have no liability, or a limited liability, to pay the costs of that practitioner, unless the respondent succeeds in obtaining an order for costs against the applicant, will not determine whether an order for costs should be made in favour of the assisted respondent if the applicant fails in the litigation it has brought against that party. The fact that such an order may be made is a risk an applicant must take into account in continuing its litigation.

(Emphasis added).

32    Justice Lee also referred to the public interest served by the then existing pro bono scheme, as follows:

14    Order 80 serves the public interest by encouraging practitioners to render public service by providing advice and representation free of charge to indigent parties engaged in litigation in the court. In part, the services are provided by practitioners in performance of a duty to assist the administration of law that arises out of rights and privileges practitioners obtain upon being admitted to practice, or upon being registered as entitled to practice, by a superior court.

15    Order 80 has been included in the Rules in response to a marked increase in the number of litigants in person who appear in this Court, a number which continues to expand. If practitioners withdrew from participation in the “pro bono” scheme which operates under O 80 there would be a real risk that efficient disposal of the work of the Court would suffer. Furthermore, in endeavouring to fairly administer the law in circumstances where a party is unable to properly present its case, the impartiality of the Court may appear to be compromised.

16    Both consequences have a corrosive effect on the administration of justice and are antithetical to the public interest. The object of O 80 r 9 is to make it clear to practitioners that if, in ordinary circumstances, it would be appropriate for a party to be ordered to pay the costs of the party for whom the practitioner appears an order will be made that will provide some remuneration to the practitioner notwithstanding that the practitioner is not entitled to recover fees from the party the practitioner represents. It is to be noted that a practitioner providing “pro bono” services undertakes similar duties and responsibilities to the party represented, and to the court, as a practitioner instructed by a client who retains the services of a practitioner for reward.

33    As to the appropriate quantum of fees, his Honour said:

17    It does not follow, however, that the amount of fees the court orders a party to pay, and to be recoverable by the practitioner under O 80 r 9, will be the full fees ordinarily rendered by the practitioner. The amount will be a sum set by the court after having regard to various matters, being an amount that appears to be a fair sum in all the circumstances.

34    As to considerations of public policy, I should also make reference to 1465778 Ontario Inc et al v 1122077 Ontario Ltd et al (2006) 275 DLR (4th) 321. In that case, Feldman JA, delivering the judgment of the Ontario Court of Appeal, said at 332-33 [34]-[35]:

34    It is clear from the submissions of the amici representing the views of the profession, as well as from the developing case law in this area, and I agree, that in the current costs regime, there should be no prohibition on an award of costs in favour of pro bono counsel in appropriate cases. Although the original concept of acting on a pro bono basis meant that the lawyer was volunteering his or her time with no expectation of any reimbursement, the law now recognizes that costs awards may serve purposes other than indemnity. To be clear, it is neither inappropriate, nor does it derogate from the charitable purpose of volunteerism, for counsel who have agreed to act pro bono to receive some reimbursement for their services from the losing party in the litigation.

35    To the contrary, allowing pro bono parties to be subject to the ordinary costs consequences that apply to other parties has two positive consequences: (1) it ensures that both the non-pro bono party and the pro bono party know that they are not free to abuse the system without fear of the sanction of an award of costs; and (2) it promotes access to justice by enabling and encouraging more lawyers to volunteer to work pro bono in deserving cases. Because the potential merit of the case will already factor into whether a lawyer agrees to act pro bono, there is no anticipation that the potential for costs awards will cause lawyers to agree to act only in cases where they anticipate a costs award.

35    I agree with the observations of Lee J and Feldman JA set out above. Each of those observations is applicable to the exercise of the discretion vested in the court under r 4.19(3) of the Federal Court Rules to make an order that costs be paid to pro bono counsel.

36    Mr Watkins’ contentions about his impecuniosity and the fact that he was “he was the only one incurring costs while Miss Tatana receive[d] free legal representation” are irrelevant to the exercise of that discretion, for the reasons given by Lee J in the passages set out at [31] above.

37    In my view, it is appropriate in this case to award a fair sum for Ms Tatana’s legal costs, for the reasons advanced by counsel, and that the applicants be ordered to pay those costs directly to counsel.

38    I am also of the view that it is appropriate for those costs be fixed in a lump sum.

39    The source of the court’s power to order lump sum costs is found in s 43(3)(d) of the Federal Court of Australia Act 1976 (Cth). Wherever it is practicable and appropriate to do so, the court’s preference is for the making of a lump sum costs order: see paragraph 4.1 of the court’s Costs Practice Note (GPN-Costs). The court’s power to order lump sum costs is discretionary. It is not confined and may be exercised whenever the circumstances warrant it: see Fewin Pty Ltd v Burke (No 3) (2017) FCA 693 at [10] (Markovic J), citing Su v Australian Fisheries Management Authority (No 3) [2008] FCA 2018 at [1] (Reeves J).

40    The purpose of the lump sum costs process is “to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation”: Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 120 (von Doussa J). The assessment of costs under a lump sum order does not require a process similar to taxation: Ginos Engineers Pty Ltd v Autodesk Australia Pty Ltd (2008) 249 ALR 371; [2008] FCA 1051 at [23] (Finn J). While the assessment involves the “application of a much broader brush than that applied on taxation” and “is one of estimation or assessment and not of arithmetic calculation or precision”, the approach is one which must be “logical, fair and reasonable”: see Nine Films and Television Pty Ltd v Ninox Television Ltd [2006] FCA 1046 at [8] (Tamberlin J). See also Fewin at [60] (Markovic J), citing Bayley & Associates Pty Ltd v DBR Australia Pty Ltd [2014] FCA 346 at [17(e)] (Foster J).

41    It is common for the court to take as its starting point the evidence of the charges for professional costs and disbursements incurred, and to discount that figure to take account of the acceptability of the charges made, the conduct of the proceeding and the measure of success on issues, to arrive at a figure which as a matter of judgment is neither over-compensatory nor prejudicial to the successful party: Ginos Engineers at [24] (Finn J); Telstra Corporation Ltd v Phone Directories Co Pty Ltd [2011] FCA 1463 at [5] (Gordon J); Bitek Pty Ltd v IConnect Pty Ltd [2012] FCA 506 at [12] (Kenny J).

42    I accept Mr Molesworth’s evidence as to the work performed and the fees incurred. Counsel’s rates are below the maximum rate permitted by the National Guide to Counsel Fees, and I am satisfied that those rates are reasonable having regard to the nature of the matter. I do not otherwise propose to embark on a line-by-line analysis of counsel’s fees of the kind that would be impermissible in the lump sum costs process.

43    Taking the impressionistic view that one is obliged to take in matters of this sort, and being astute to avoid overestimating the recoverable costs, I consider it is appropriate to apply a 30% discount to the costs that have been incurred by counsel in fixing an overall lump sum. Accordingly, applying a 30% discount to the total sum of $44,748, I will fix Ms Tatana’s costs in the sum of $31,323.60.

44    I will accordingly order that: compliance with r 4.01(2) of the Federal Court Rules be dispensed with; the proceeding be dismissed; the applicants pay Ms Tatana’s costs fixed in the sum of $31,323.60; and they pay that sum directly to Mr Molesworth.

Associate:

Dated:    23 March 2023