Federal Court of Australia

Natch v Stennson Pty Ltd (No 3) [2025] FCA 472

ORDERS

THE COURT ORDERS THAT:

1.    The costs payable by the applicants to the respondent pursuant to order 2 of the orders of the Court made on 20 December 2024 in this proceeding and in proceeding VID 720 of 2021 are quantified in the amount of $19,917.09.

2.    The costs referred to in paragraph 1 be paid within 14 days of the date of this order.

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

REASONS FOR JUDGMENT

O’BRYAN J:

Introduction

1    The applicants have been ordered to pay the costs of the first respondent, Stennson Pty Ltd (Stennson), in two related proceedings, being proceeding number VID 569 of 2019 (which will be referred to as the principal proceeding) and proceeding number VID 720 of 2021 (which will be referred to as the appeal proceeding). The background to the orders for costs are described in Natch v Stennson Pty Ltd (No 2) [2024] FCA 1498 (Natch No 2). These reasons assume familiarity with those reasons and will avoid repetition.

2    During the taxation of Stennson’s costs, the applicants applied for discovery from Stennson. On 12 September 2024, a Judicial Registrar made orders dismissing the discovery application and issued a certificate of taxation in the principal proceeding in the amount of $197,996.72 and in the appeal proceeding in the amount of $31,631.75.

3    On 1 October 2024, the applicants filed an application in the principal proceeding seeking a review of the Judicial Registrar’s decision to dismiss the discovery application and, on 15 November 2024, the applicants filed an equivalent application in the appeal proceeding (discovery review).

4    On 7 October 2024, the applicants filed applications in both proceedings seeking a review of the Judicial Registrar’s taxation decisions pursuant to r 40.34 of the Federal Court Rules 2011 (Cth) (FC Rules) (taxation review).

5    On 20 December 2024, I made orders dismissing the discovery review application in both proceedings for the reasons published in Natch No 2. At the same time, I made orders in both proceedings that the applicants pay Stennson’s costs of the discovery review application and that the costs be awarded in a lump sum pursuant to r 40.02(b) of the FC Rules (discovery review costs assessment). I also made timetabling orders in both proceedings that:

(a)    by 31 January 2025, Stennson file and serve any evidence to be relied upon and an outline of submissions limited to 3 pages with respect to the quantification of the costs to be awarded;

(b)    by 7 February 2025, the applicants file and serve an outline of submissions limited to 3 pages with respect to the quantification of the costs to be awarded; and

(c)    the quantification of the costs to be awarded will be determined on the papers.

6    These reasons concern the discovery review costs assessment.

7    On 22 January 2025, the applicants filed an application for leave to appeal against the decision in Natch No 2 and also applied for a stay of the orders made on 20 December 2024 (which application was allocated proceeding number VID 57 of 2025). The application for a stay of the orders was heard and dismissed by Snaden J on 7 February 2025: Natch v Stennson Pty Ltd [2025] FCA 69. In those circumstances, and unless and until the orders made on 20 December 2024 are set aside or varied on appeal, Stennson is entitled to the benefit of the judgment obtained in Natch No 2. I will therefore proceed to determine the quantification of costs to be paid to Stennson in accordance with those orders.

8    In Natch No 2 (at [14]), I made reference to what seems to be a practice of the applicants of appointing and dismissing legal representatives. That practice has continued, at least in the case of the first applicant, Mr Natch. On 10 February 2025, Mr Natch filed a notice stating that he had terminated the retainer of TLM Law and had not appointed another lawyer to represent him. The notice of termination was only in respect of Mr Natch and the second and third applicants continue to be represented by TLM Law. Although Mr Natch now represents himself, the applicants have a common interest in the proceeding because the orders for costs have been made against them jointly and severally (reflecting the usual rule as discussed in
G E Dal Pont, The Law of Costs (5th ed, LexisNexis, 2021) at [11.2] and the authorities there cited).

9    When making the timetabling orders on 20 December 2024, I had assumed that the discovery review costs assessment could be undertaken relatively quickly. That assumption proved to be incorrect. Evidence adduced on the assessment suggested that one or more of Stennson’s solicitors did not have their name entered on the Register of Practitioners kept at the Registry of the High Court of Australia (High Court Register). As discussed below, usually the Court will not allow the recovery of legal fees for a solicitor whose name is not entered on the High Court Register. Accordingly, it became necessary for the Court to receive further evidence from Stennson on that issue.

10    The question whether Stennson’s solicitors were registered on the High Court Register was also relevant to the taxation review. It was not a matter that had been raised before the Judicial Registrar when conducting the taxation and, accordingly, had not been addressed in the taxation.

11    As a consequence, Stennson adduced further evidence on that issue. In the circumstances, I also deferred the determination of this discovery review costs assessment until after the hearing of the taxation review so that I could receive submissions from the parties about the non-registration issue.

12    For the reasons that follow, I have determined that the quantum of costs payable by the applicants to Stennson in respect of the discovery review is $19,917.09.

Evidence adduced on the discovery review costs assessment

Overview

13    In compliance with the Court’s timetabling orders, on 31 January 2025 Stennson filed and served an affidavit with respect to the discovery review costs assessment affirmed by its solicitor, Darren Frank Cain of KCL Law. Stennson elected not to file written submissions. I take the affidavit as read on the question of costs.

14    The applicants did not comply with the Court’s timetabling orders. They filed the following materials in respect of the discovery review costs assessment:

(a)    two affidavits sworn by Mr Natch on 10 February 2025;

(b)    a written submission of Mr Natch dated 11 February 2025 comprising 10 pages; and

(c)    a written submission on behalf of the second and third applicants dated 11 February 2025 comprising 3 pages.

15    In one of his affidavits dated 10 February 2025, Mr Natch adduced evidence that the principal solicitor for Stennson, Mr Cain of KCL Law, did not have his name entered on the High Court Register. This was the first time that this issue had been raised. Mr Natch filed a further affidavit sworn on 17 February 2025 which largely replicated the 10 February 2025 affidavit and raised the same issue. It was not entirely clear whether the latter affidavit was intended to be relied on in respect of the discovery review costs assessment or in respect of the taxation review (or both). Ultimately, I treated the affidavit as read on both applications.

16    All of the applicants’ materials were filed after the time allowed by the timetabling orders made on 20 December 2024. Additionally, the length of Mr Natch’s submission (at 10 pages) greatly exceeded what was allowed under those orders. As discussed below, Mr Natch’s submissions largely re-agitated arguments advanced before the Registrar and on the discovery review application. As such, they were largely irrelevant to the quantification of the costs to be awarded under the discovery review costs assessment.

17    Despite the non-compliance with the Court’s orders, I determined that the materials filed on behalf of the applicants would be taken into account in the discovery review costs assessment. My chambers notified the parties of that decision on 13 February 2025. I also formed the view that Stennson should be given an opportunity to reply, by way of submissions and evidence in reply, to two matters raised by the applicants’ materials, being:

(a)    whether Mr Cain’s name appears in the High Court Register and, if not, the significance of that fact for the award of costs in favour of Stennson; and

(b)    the appropriate discount to be applied to the costs incurred by Stennson to reflect an award of costs on a party and party basis.

18    Stennson was given leave to file a submission and evidence in reply, limited to those two issues, by 4.00 pm on 18 February 2025.

19    Stennson sought additional time for the filing of its material, which was granted, and the parties also sought the adjournment of the taxation review (which had been listed for 21 February 2025), which was also granted.

20    On 6 March 2025, Stennson filed a further affidavit of Mr Cain addressing the High Court Register issue. Stennson also filed written submissions which were principally directed to the taxation review but which also addressed the High Court Register issue.

21    The hearing of the taxation review occurred on 28 March 2025. At that hearing, the parties addressed the High Court Register issue. I have taken those submissions into account for the purposes of this discovery review costs assessment.

Mr Cain’s affidavit dated 31 January 2025

22    Mr Cain’s affidavit contained a costs summary as contemplated by cl 4.10 of the Federal Court’s Costs Practice Note (Costs Practice Note) and containing the information required by Annexure A of the Costs Practice Note. The costs summary contained the amounts invoiced by KCL Law to Stennson for legal costs and disbursements incurred in connection with the review which were as follows and totalled $31,351.09 (ex GST):

23    In accordance with Part A of Annexure A of the Costs Practice Note, Mr Cain’s affidavit verified that:

(a)    he has read the Costs Practice Note;

(b)    Stennson is entitled to claim input tax credits in respect of any GST relevant to the costs and disbursements set out in the costs summary and has complied with Part 6 of the Costs Practice Note;

(c)    Stennson is not claiming more than it is liable to pay for costs and disbursements in the costs summary (ex GST);

(d)    the calculations made for the total costs and disbursements in the costs summary are correct;

(e)    the matters noted in the affidavit are a fair and accurate summary of the total costs and disbursements that Stennson is entitled to claim; and

(f)    the total costs and disbursements claimed are capable of further verification through source material (such as records, tax invoices and receipts for payment) should the Court require that such material be produced.

24    For the purposes of Part B of Annexure A of the Costs Practice Note, Mr Cain further deposed that:

(a)    the costs summary had been prepared by KCL Law and not with the assistance of a costs consultant;

(b)    Stennson is liable to pay, and has paid, the total cost and disbursements of $31,351.09 (ex GST);

(c)    the amount of the lump sum costs sought by Stennson is the total cost and disbursements of $31,351.09 (ex GST);

(d)    the categories of the work fairly and reasonably incurred in the preparation of the opposition to the application to review the Registrar's decision are: corresponding with the applicants and the court; reviewing the application to review; researching the right of the applicants to appeal the Registrar's decision; preparing brief to counsel; reviewing the applicants’ outline of submissions and supporting affidavit of Mohan Natch; conference with counsel regarding those matters; drafting affidavit of Darren Frank Cain on behalf of Stennson; reviewing and settling outline of submissions of Stennson; and appearance at directions hearing and hearing of the application to review;

(e)    the persons who performed the work the subject of the costs summary are, and the estimate (in percentage terms) of the proportion of the total sum claimed attributable to that person is, set out in the following table:

(f)    the amounts claimed fall within the amounts permissible under the Court scale (FC Rules - Sch 3) for attendances and the Court's National Guide to Counsel Fees.

25    Exhibited to Mr Cain’s affidavit were copies of each of the invoices included in the costs summary, which I have reviewed.

26    In the main, I accept the accuracy of everything stated in Mr Cain’s affidavit. However, two matters should be noted for clarity. First, at paragraph 6, Mr Cain deposed that the costs and disbursements incurred in connection with the discovery review application totalled $31,578.36 (ex GST), but the table in that paragraph shows that the correct figure is $31,351.09 (ex GST). Second, at paragraph 10, Mr Cain deposed that the percentage break-down of the total sum claimed between counsel and each of the solicitors, which is reproduced in the table above, was calculated without reference to the amount of disbursements. That statement is ambiguous, but the arithmetic shows that the relevant percentages have been calculated by reference to the total sum claimed including disbursements (that is, the denominator for the calculation is $31,351.09).

27    The affidavit also has a number of shortcomings which should be identified.

28    First, while KCL Law’s invoice B175034 provides a summary of the work performed by KCL Law staff on a day by day basis, the invoice does not specify the charge for each attendance undertaken. Further, while Mr Cain’s affidavit provides a summary of the categories of work undertaken by KCL Law staff, it does not provide an estimate of the percentage that each category comprises of the total costs charged (as required by Annexure A of the Costs Practice Note). Those failures restrict the Court’s ability to assess the reasonableness of the costs incurred. The same problem does not affect KCL Law’s invoices numbered B173898, B175034 and B175529 because those invoices are in respect of counsel fees and attached an itemised fee slip from counsel.

29    Second, and as stated earlier, in early October 2024 the applicants filed two interlocutory applications: the first being the discovery review application and the second was the taxation review application. A case management hearing was conducted on 15 November 2024 at which timetabling orders were made to hear each of the applications separately and sequentially. The legal costs incurred in the period of October until 15 November 2024 would necessarily have involved both applications because, until the case management hearing was conducted, the parties were required to give consideration to the manner in which both applications should be heard and determined. It is apparent from the invoices issued by KCL Law that the invoices did not distinguish between the two applications because the invoices are titled “Mohan Natch & Ors: Review of Application (Discovery and Taxation)”. Mr Cain’s affidavit makes no attempt to separate out the costs incurred in respect of the review of the Registrar’s decision concerning discovery and the review of the taxation.

30    The costs order made on 20 December 2024 relates solely to the costs incurred in respect of the discovery review application. In my view, the costs incurred by Stennson in the period of October until 15 November 2024 should be adjusted to remove the costs incurred in respect of the taxation review.

31    However, it is appropriate also to quantify the costs incurred in respect of the taxation review on a lump sum basis. Contemporaneously with delivering this judgment, the Court is also delivering judgment on the taxation review. That judgment considers whether the costs incurred by Stennson in respect of the taxation review should be allowed in favour of Stennson.

32    The difficulty is making a reasonable estimate of the amount of the costs to be subtracted in circumstances where Mr Cain has not attempted any estimate. I consider that, in the circumstances, the costs incurred in the period of October until 15 November 2024 should be halved, with one half attributed to the discovery review application and the second half attributed to the taxation review. That can be readily undertaken in the case of counsel’s fees as there is a separate fee slip covering the period until 15 November 2024 in the amount of $5,750 (excl GST). That amount should be reduced to $2,875 (with the other half attributed to the taxation review).

33    The appropriate reduction is more difficult in the case of the fees charged by KCL Law staff for the reason explained above – the invoice rendered by KCL Law does not specify the charge for each attendance undertaken. Recognising the shortcomings in Mr Cain’s affidavit, and the need to approach a lump sum estimate with a broad brush, I will assume that the work undertaken by KCL Law staff occurred in a similar pattern to counsel. Counsel’s fees until 15 November 2024 were approximately one third of counsel’s fees until the completion of the discovery review hearing on 16 December 2024. I will therefore assume that:

(a)    KCL Law’s fees until 15 November 2024 were one third of the total fees charged; and

(b)    one half of that one third (that is, one sixth of the total fees), should be attributed to the taxation review.

Mr Natch’s first affidavit dated 10 February 2025 (and affidavit dated 17 February 2025)

34    In his first affidavit sworn on 10 February 2025 (and largely replicated in his affidavit dated 17 February 2025), Mr Natch deposed that he spoke with a Registry Officer at the High Court who informed him that, while Mr Scotter’s name appears in the High Court Register, each of Darren Cain’s and Dominic Brown’s names do not. Mr Natch also deposed to the registration status of a number of other individuals to whom it is not necessary to refer as they did not perform work the subject of the costs summary.

Mr Natch’s second affidavit dated 10 February 2025

35    In his second affidavit sworn on 10 February 2025, Mr Natch adduced evidence of correspondence between the parties seeking to resolve the dispute. Mr Natch asserted in the affidavit that the objective of the correspondence was to save the costs of a contested hearing. However, the affidavit does not establish that any offer of settlement was made by the applicants to Stennson which was more favourable to Stennson than the outcome they achieved (the dismissal of the review application). Throughout the correspondence, the applicants maintained their demand for discovery, and ultimately pressed the application for review of the Registrar’s decision, on which they failed. It follows that the correspondence provides no basis for altering the costs order made in favour of Stennson.

Mr Cain’s second affidavit dated 6 March 2025

36    In his affidavit affirmed on 6 March 2025, Mr Cain deposed to the High Court Register registration status of each of Mr Scotter, Mr Cain and Mr Brown. Mr Cain deposed that Mr Scotter’s name was entered in the High Court Register on 4 April 2002, Mr Brown’s name was entered on 22 October 2019, but that Mr Cain’s name was not entered until 23 February 2025. Relevantly, Mr Cain’s name did not appear on the Register at the points in time for which costs are sought for his work as a solicitor.

Submissions of the parties

Stennson’s submissions

37    When judgment was delivered on the application on 20 December 2024, counsel for Stennson submitted that costs should be awarded in favour of Stennson on an indemnity basis and the applicants should be ordered to pay the costs forthwith. At that time, I informed Stennson that it could apply for such orders at the time of filing evidence and submissions on the question of costs (which were timetabled for 31 January 2025).

38    Although Mr Cain deposed in his affidavit that the amount of the lump sum costs sought by Stennson is the total of the costs and disbursements incurred by Stennson, I do not understand the affidavit to constitute an application for costs on an indemnity basis. Even if it were such an application, I would not order that the applicants pay costs on an indemnity basis. Whilst I dismissed the applicant’s discovery review application, I do not consider that the application was so unreasonable that an order for indemnity costs was justified.

39    In respect of the recovery of costs for work performed by a solicitor who is not registered on the High Court Register, Stennson acknowledged that the usual course is for the Court to reduce the amount of costs to the amount allowed for a non-solicitor (that is, a law clerk). In respect of Mr Cain, that would require his usual charge rate, being $690 per hour (ex GST), to be reduced to $240 per hour (ex GST). Stennson submitted, however, that in some cases, the Court has allowed recovery at a higher rate having regard to the nature of the work performed (citing University of Western Australia v Gray (No 25) (2009) 180 FCR 483 (Gray) at [108]), and urged that such an approach be taken in the case of Mr Cain.

Mr Natch’s submissions

40    As noted earlier, the length of Mr Natch’s written submission greatly exceeded what was allowed under the Court’s orders. The submission largely re-agitated arguments advanced before the Registrar and on the application to review the Registrar’s decision concerning discovery.

41    The ultimate contention advanced by Mr Natch is that there should be no order as to costs as between the parties. Mr Natch failed to appreciate that I have already made a final order that the applicants pay Stennson’s costs. While a party who is entitled to costs may apply to the Court for an order of the kinds referred to in r 40.02, a party who is subject to a final order that they pay costs is generally not entitled to apply for a variation of that order. Subject to limited exceptions (which are referred to in r 39.05), the Court will not revisit final orders that have been entered.

42    In the present case, Mr Natch has applied for leave to appeal against the orders made on 20 December 2024. That is the appropriate method for Mr Natch to challenge the costs order that has already been made. Nothing in Mr Natch’s submissions otherwise provides a proper basis for the costs order to be reconsidered. Those submissions can be addressed briefly.

43    First, Mr Natch submitted that Stennson breached its overarching obligations, referring to the Civil Procedure Act 2010 (Vic) (CPA). It is unnecessary to determine whether the CPA applies to proceedings in this Court by force of s 79 of the Judiciary Act 1903 (Cth) (Judiciary Act), but the proposition seems unlikely having regard to its terms (the overarching obligations apply to parties to a civil proceeding which is defined as a proceeding in the Supreme, County and Magistrates’ Courts of Victoria). In any event, if it had any merit, Mr Natch’s argument could also be advanced by reference to s 37N of the Federal Court of Australia Act (1976) (FCA Act). The alleged breach centred on Stennson’s failure to file a bill of costs in accordance with Form 127 and corresponding failure to comply with the requirements of r 40.18. In Natch No 2, I reached the conclusion that the defects in the bills of costs that were filed in the principal and appeal proceedings did not have any material bearing on the determination of the discovery application (at [34]-[44]). For the same reasons as there expressed, the defects in the bills of costs do not support a finding that Stennson breached its overarching obligations and do not afford any reason to alter the costs order that has been made. For completeness, I record that there is no evidence to support Mr Natch’s assertion that Stennson’s solicitors engaged in misleading and deceptive conduct when making an offer of compromise, and I reject the assertion.

44    Second, Mr Natch submitted that Stennson’s solicitor “went about briefing only the handful of cost counsels available to make them conflicted so they could not be engaged by the Applicants”. The submission is not supported by any evidence and I therefore reject it.

45    Third, Mr Natch submitted that there were serious failures in the Court’s processes associated with the taxation of costs in the principal and appeal proceedings. Those alleged failures are the subject of the applications for review which have been made by the applicants. The first of them, being the discovery review application, has now been determined adversely to Mr Natch. The second, being the taxation review, is the subject of judgment delivered contemporaneously with this judgment, and has also been determined in large part adversely to Mr Natch: see Natch v Stennson Pty Ltd (No 4) [2025] FCA 473. It follows that those alleged failures do not provide a basis for the Court to revisit its costs order.

46    Fourth, Mr Natch submitted that the applicants acted reasonably in making their discovery review application. It is unnecessary to express a view on whether the applicants acted reasonably. Even accepting that they did, the application was unsuccessful and Stennson is entitled to its costs in successfully opposing the application.

47    The last section of Mr Natch’s submission addressed the costs summary provided by Mr Cain in his affidavit dated 31 January 2025. Mr Natch’s principal submission on the costs summary was that the costs incurred and claimed are excessive having regard to the scope of the review proceeding. That submission will be addressed below. Mr Natch also submitted that Mr Cain’s affidavit failed to establish that the indemnity principle is not breached. I reject that submission. Mr Cain deposed to that fact and there is no basis to doubt his evidence. Otherwise, Mr Natch’s submissions make numerous complaints about the costs incurred in the proceeding, the broad thrust of which is that the costs were unnecessarily incurred. I have taken those submissions into account in determining the quantum of costs to be awarded.

The second and third applicant’s submissions

48    The written submissions on behalf of the second and third applicants were prepared by counsel and TLM Law. Apart from being late, the submissions complied with the Court’s orders and were properly directed to the quantum of costs to be awarded. The second and third applicants advanced three submissions.

49    First, they submitted that the quantum should be assessed on a party and party basis, whereas Stennson had made a claim for indemnity costs. I accept that submission. Order 2 of the orders made on 20 December 2024 was for the payment of costs without any further description of the costs which, by r 40.01, is taken to be an order for costs as between party and party. Further, in Natch No 2 at [66], I stated that timetabling orders would be made for Stennson to file evidence and submissions with respect to the costs incurred and the amount sought on a party and party basis by way of lump sum. By that statement, I indicated that the starting point for the assessment of a lump sum would be the costs incurred, but that the costs were being awarded on a party and party basis. When judgment was given on 20 December 2024, counsel for Stennson submitted that Stennson would seek costs on an indemnity basis. At that time, I indicated to counsel that that course was permitted under r 40.02 and could be pursued under the timetabling orders. However, Stennson did not file any submissions or evidence in support of the award of costs on an indemnity basis. In my view, no proper basis has been established for such an award.

50    Second, the second and third applicants submitted that the amounts claimed in professional fees are not itemised in the affidavit. I accept that submission. It is therefore difficult to assess the appropriateness of the amounts claimed by Stennson. I have taken that into account in my assessment of the appropriate quantum to be determined.

51    Third, the second and third applicants submitted that they had partial success on the application and that Stennson’s conduct caused some of the costs to be incurred. In that regard, they submitted that a central issue for the applicants was the failure by Stennson to file a bill of costs in the proper form. The applicants further submitted that the deficiencies amounted to a failure to certify that Stennson was not claiming more than it was liable to pay and that this went to the heart of the applicants’ challenge to Stennson’s costs in the proceedings, namely that it appeared that the indemnity principle had not been satisfied. I do not accept that submission. In Natch No 2 I concluded that, while Stennson’s bills of costs were deficient in a number of respects, the failure to include in the bills of costs a lawyer’s certification in the form required by para 3(a) of Part A of Form 127 was, in a practical sense, cured by Mr Cain’s affidavits (in both proceedings) dated 20 August 2024 (at [42]) and the failure to include in the bills of costs a lawyer’s certification in the form required by para 4 of Part A of Form 127 was, in a practical sense, cured at the taxation hearing (at [43]). Overall I concluded that the defects in the bills of costs that were filed in the proceedings did not have any material bearing on the determination of the discovery application (at [44]). It follows that the applicants were not successful on their arguments concerning the defects in the bills of costs and it was not the conduct of Stennson that caused the costs (of the review application) to be incurred.

52    By reason of the foregoing matters, the second and third applicants submitted that the Court ought to reduce the amount claimed by Stennson by 40%.

53    At the hearing of the taxation review, the second and third applicants also advanced submissions concerning the High Court Register issue. The second and third applicants submitted that Stennson’s costs should be assessed on the basis that Mr Cain is only permitted to recover costs as a non-solicitor (that is, a law clerk).

Lump sum assessment

General principles

54    It is appropriate to commence with the applicable principles, which were not in dispute between the parties.

55    The Court’s discretion to award costs under s 43 of the FCA Act is broad and is not bound by rigid or inflexible rules. The discretion must be exercised judicially, consistently with the purpose of the power and taking account of relevant facts and circumstances of the litigation: Kazar v Kargarian (2011) 197 FCR 113 at [4] (Greenwood and Rares JJ). While not a rigid rule, usually the discretion to award costs is exercised in favour of a successful party: Oshlack v Richmond River Council (1998) 193 CLR 72 at [35] (Gaudron and Gummow JJ), [66]-[67] (McHugh J) and [134] (Kirby J); Foots v Southern Cross Mine Management Pty Ltd (2007) 234 CLR 52 at [25] (Gleeson CJ, Gummow, Hayne and Crennan JJ). The mere fact that a court does not accept all of a successful party’s arguments does not make it appropriate to apportion costs on an issue by issue basis: Australian Trade Commission v Disktravel [2000] FCA 62 at [3]-[4]; The State of Victoria v Sportsbet Pty Ltd (No 2) [2012] FCAFC 174 at [8]; Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) [2015] HCA 53; 327 ALR 192 at [6].

56    The Court’s power to quantify costs as a lump sum is expressed in r 40.02 of the FC Rules. The purpose of such a rule 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, cited with approval by the Full Court in Paciocco v Australia and New Zealand Banking Group Ltd (No 2) (2017) 253 FCR 403 at [15]. Many of the authorities have recognised that the starting point for the fixing of lump sum costs is the charges rendered by the costs applicant’s solicitors: Innes v AAL Aviation Ltd (No 2) [2018] FCAFC 130 at [17]. In Seven Network Limited v News Limited [2007] FCA 2059 (at [25]), Sackville J summarised a number of the principles that guide the assessment of costs under a lump sum costs order, which include the following:

(a)    An order that costs be assessed as a lump sum does not envisage that any process similar to that involved in taxation should take place, and the Court applies a “much broader brush” than would be used on a taxation.

(b)    The Court should be confident that the approach taken to the estimate of costs is logical, fair and reasonable. The Court should be astute to avoid both overestimating the recoverable costs and underestimating the appropriate amount.

(c)    Although the power to assess a lump sum for costs involves the exercise of a discretion, it is necessary to bear in mind fundamental principles applicable to an assessment of costs on a party and party basis.

57    Section 55C of the Judiciary Act provides for the maintenance of the High Court Register by the Chief Executive and Principal Registrar of the High Court. Section 55B(1) provides that a person who is entitled to practice as a barrister or solicitor in a State or Territory Supreme Court has the like entitlement to practise in any federal court. However, s 55B(3) stipulates that a person is not entitled to practise as a barrister or solicitor in a federal court by reason of s 55B(1) unless their name appears in the High Court Register. As a consequence of those provisions, it is well-established that, in a dispute before a federal court, a party’s entitlement to recover costs for a solicitor is dependent upon that solicitor’s name appearing in the High Court Register: Guss v Veenhuizen (No 2) (1976) 136 CLR 47 at 52 (Gibbs ACJ, Jacobs and Aickin JJ) and 59 (Mason and Murphy JJ).

58    It follows that for the purposes of the assessment of a lump sum, it is not open to treat the work done by a person who is a solicitor, but not one whose name appears in the High Court Register, as if they were so registered: Gray at [93]; Jadwan Pty Ltd v Rae & Partners (A Firm) (No 7) [2022] FCA 1174 (Jadwan) at [27]-[37]; Sharif v Vitruvian Investments Pty Ltd (No 5) [2024] FCA 134 (Sharif) at [67]. There is however authority for the proposition that solicitors whose names do not appear on the High Court Register can, in the taxing officer or Court’s discretion, have their costs assessed at the level of an unqualified legal clerk: Gray at [94]; Jadwan at [34] and [40]; Sharif at [65] and [80].

59    In Jadwan, an argument was advanced that the FCA Act and the FC Rules had “moved on since the decision in Gray” and that, as a consequence, the costs of a legal practitioner may be allowed in the taxation or assessment of an order for costs, even if his or her name does not appear on the High Court Register (at [25]-[26]). A similar argument was (faintly) advanced by Stennson in the present proceeding. The argument was rejected by O’Callaghan J in Jadwan (at [32]). I respectfully agree with his Honour’s analysis. The argument was not resurrected on the appeal in Jadwan (reported at Jadwan Pty Ltd v Rae & Partners (A Firm) [2023] FCAFC 182).

Assessment

60    Applying the principles stated above, the assessment to be made is a lump sum assessment of Stennson’s costs on a party and party basis. There are three categories of costs: counsel’s fees, solicitor’s fees and disbursements.

61    I am satisfied that the charges made by counsel are fair and reasonable. The rate charged by counsel is, in my experience, reasonable. I consider that the time spent on the application, which is itemised in counsel’s fees slips, is also reasonable, subject to an adjustment to deduct work performed on the taxation review. For the reasons given earlier, I have estimated that amount as $2,875. Accordingly, the lump sum award should include the amount of $13,750 for counsel’s fees. I also consider that the amount of $2,875, which is deducted because it relates to the taxation review, should be recovered on the taxation review.

62    I consider that the amount of solicitors’ costs claimed by Stennson should be reduced for four reasons.

63    First, Mr Cain was not registered on the High Court’s Register of Practitioners. In those circumstances, it is appropriate to reduce the amount claimed for work performed by Mr Cain by approximately 65% on the basis that such a sum is likely to have been recovered had the work been performed by a law graduate or articled clerk. Mr Cain’s affidavit states that Mr Cain’s fees were 34% of the total fees rendered for the discovery review application, which equates to $10,659.37. Reducing that amount by 65% leaves approximately $3,730 permitted to be charged by Mr Cain. The total fees for KCL Law are therefore reduced to approximately $5,630.

64    Second, the costs should be reduced for fees that relate to the taxation review. For the reasons given earlier, one sixth of the fees should be allocated to the taxation review, being an amount (calculated on the reduced fees) of approximately $940, leaving an amount of $4,690. The amount of $940, which is deducted because it relates to the taxation review, should be recovered on the taxation review.

65    Third, the costs are to be awarded on a party and party basis, not an indemnity basis which is implicit in Stennson’s claim.

66    Fourth, Stennson bears an evidentiary onus to demonstrate that all costs are properly incurred and there is no unnecessary duplication of the work undertaken by different solicitors and counsel. Whilst Mr Cain’s affidavit provided a summary of the categories of work undertaken, it did not do so in percentage terms (as required by Annexure A of the Costs Practice Note). That failure restricted the Court’s ability to be confident about the efficient incurring of costs.

67    Taking all of the above matters into account, and recognising that there is some interaction between each of the above matters, I consider that an appropriate allowance for solicitors’ costs on a lump sum basis is $4,000.

68    There is no reason that the costs of the transcript should not be recovered. Accordingly, the lump sum award should also include the amount of $2,167.09 for the transcript.

69    Taking the above into account, I consider that costs should be awarded in a lump sum of $19,917.09 comprising:

(a)    $13,750 on account of counsel’s fees;

(b)    $4,000 on account of solicitors fees; and

(c)    $2,167.09 on account of disbursements (transcript).

Conclusion

70    In conclusion, I consider that the costs awarded in favour of Stennson in both the principal proceeding and the appeal proceeding should be assessed in a lump sum in the amount of $19,917.09.

71    A question arises whether the costs should be apportioned between the principal proceeding and the appeal proceeding and separate orders made in each proceeding for a proportion of the costs. In my view, there is no necessity to do so. The proceedings involve the same parties and there was no differentiation between the proceedings in respect of the issues that were raised and needed to be determined. In those circumstances, a single order can be made in the principal proceeding.

Associate:

Dated:    15 May 2025