Federal Court of Australia

Natch v Stennson Pty Ltd (No 4) [2025] FCA 473

ORDERS

THE COURT ORDERS THAT:

1.    Within 14 days, the respondent file and serve an affidavit made by its solicitor verifying the following:

(a)    a copy of the original bill of costs (excluding annexures) with the adjustments made pursuant to the taxing officer’s rulings and the further adjustment to Mr Cain’s fees as required by the reasons of the Court published today;

(b)    the amount payable to the respondent on the taxation, including the costs of the taxation.

2.    Within 21 days, the applicants file and serve a submission confirming their agreement to the calculations contained in the affidavit filed and served pursuant to order 1 or stating, with reasons, their disagreement.

3.    Any dispute with respect to the calculations contained in the affidavit filed and served pursuant to order 1 be determined by the Court on the papers.

4.    Subject to order 5, the applicants pay the respondent’s costs of the taxation review fixed in the amount of $8,815.

5.    Within 14 days of the date of this order, the respondent may apply for a costs order different to order 4 pursuant to r 40.02 of the Federal Court Rules 2011 (Cth) by filing and serving a submission of no more than four pages and any affidavit in support.

6.    If the respondent files and serves an application under order 5, the applicants may file and serve a submission of no more than 4 pages and any affidavit in reply.

7.    Any application made by the respondent under order 5 will be determined on the papers.

8.    If the respondent makes an application under 5, order 4 is vacated.

9.    If the respondent does not make an application under order 5, the costs referred to in order 4 are to be paid within 21 days of the date of this order.

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

ORDERS

THE COURT ORDERS THAT:

1.    Within 14 days, the respondent file and serve an affidavit made by its solicitor verifying the following:

(a)    a copy of the original bill of costs (excluding annexures) with the adjustments made pursuant to the taxing officer’s rulings and the further adjustment to Mr Cain’s fees as required by the reasons of the Court published today;

(b)    the amount payable to the respondent on the taxation, including the costs of the taxation.

2.    Within 21 days, the applicants file and serve a submission confirming their agreement to the calculations contained in the affidavit filed and served pursuant to order 1 or stating, with reasons, their disagreement.

3.    Any dispute with respect to the calculations contained in the affidavit filed and served pursuant to order 1 be determined by the Court on the papers.

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 on a party and party basis 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).

2    The applicants are:

(a)    Mohan Natch;

(b)    Mohan Natch and Karan Natch (as Executors and Trustees of the Will of Andal Natch); and

(c)    Owners Corporation Plan No SP026738V.

3    The orders for costs have been made against the applicants 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.

4    The costs were taxed by a Judicial Registrar of the Court as taxing officer and certificates of taxation in each proceeding were issued on 12 September 2024.

5    On 7 October 2024, the applicants filed an application in each proceeding seeking a review of the taxation pursuant to r 40.34 of the Federal Court Rules 2011 (Cth) (FC Rules).

6    The applications for review of the taxation in both proceedings were filed by Mr Natch on behalf of all of the applicants. At that time, the applicants were not legally represented.

7    In earlier judgments, I made reference to the applicant’s history in these proceedings of appointing and dismissing legal representatives: Natch v Stennson Pty Ltd (No 2) [2024] FCA 1498 (Natch No 2) at [14]) and Natch v Stennson Pty Ltd (No 3) [2025] FCA 472 (Natch No 3) at [8]. On 23 October 2024, the applicants appointed Jeremy Broadbent of Broadbent Legal to represent them in both proceedings, and Mr Broadbent appeared at a case management hearing on 15 November 2024. On 4 December 2024, the applicants terminated Mr Broadbent’s retainer and did not immediately appoint another lawyer. However, on 13 December 2024, the applicants appointed TLM Law to represent them in both proceedings. 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.

8    As each of the applicants is jointly and severally liable in respect of the award of costs in both proceedings, they have a common interest in the review. Mr Natch’s decision to terminate the retainer of TLM Law and seek to represent himself was unexplained. It had the effect of duplicating many of the arguments advanced on the application and thereby increasing the costs of the review.

9    Mr Natch subsequently filed an amended application for review of the taxation dated 17 February 2025 and the second and third applicants filed their own amended application for review of the taxation dated 18 February 2025.

10    All of the grounds of objection raised by the applicants on the review, save for one, lacked merit. Certain of the grounds sought to re-agitate issues that had been determined by the Court in Natch No 2. There is a strong public interest in maintaining the finality of litigation and the applicants’ attempt to re-agitate issues that had been determined by the Court warrants criticism. Other grounds sought to agitate issues that had not been raised in the applicants’ notice of objection on the taxation contrary to r 40.34(3) of the FC Rules.

11    The applicants have succeeded, however, on one of their grounds of objection, albeit that the ground was not raised before the taxing officer. After the taxation, it was learned that the principal solicitor for Stennson, Darren Cain of KCL Law, did not have his name entered on the Register of Practitioners kept at the Registry of the High Court of Australia (High Court Register). As explained in Natch No 3 (at [57]-[59]), pursuant to s 55B(3) of the Judiciary Act 1903 (Cth), Mr Cain was therefore not entitled to practice as a solicitor in this Court. In such circumstances, it is appropriate to reduce the costs allowed in respect of Mr Cain’s work on the proceeding to the rate of an unqualified legal clerk. Orders will be made for the parties to provide the Court with agreed or competing calculations of the arithmetic adjustments to be made to the certificates of taxation reflecting the reduction in the fees allowed for Mr Cain.

12    Although the applicants have been successful in respect of one ground of objection, the ground was not raised before the taxing officer. Further, the applicants’ conduct of the taxation review has occasioned substantial wasted costs. In the circumstances, an award of costs on a lump sum basis fixed in the amount of $8,815 should be made in favour of Stennson in respect of the costs of the taxation review. Stennson will also be afforded an opportunity to apply for a different costs order under r 40.02 of the FC Rules.

Relevant background

13    In May 2019, the applicants commenced the principal proceeding against Stennson (as first respondent) and three other respondents. The principal proceeding was heard by Anastassiou J in October 2021. At the start of the fifth day of the hearing, the parties told his Honour that the proceeding against Stennson was to be discontinued to give effect to the terms of compromise agreed between the applicants and the second to fourth respondents. On 27 October 2021, his Honour made the following order giving the applicants leave to discontinue their claims against Stennson subject to the payment of costs:

The Applicants have leave to discontinue their claims set out in the Applicants’ Further Amended Statement of Claim dated 1 October 2020 against the First Respondent on the condition that the Applicants pay the First Respondent its costs of and incidental to this proceeding, and its costs of bringing its cross claims and defending the Second Respondent’s cross claim, including all reserved costs, on a party and party basis, to be taxed in default of agreement.

14    On 2 December 2021, the applicants filed an application for an extension of time in which to seek leave to appeal the above costs order (which is referred to as the appeal proceeding). On 2 June 2022, O’Callaghan J dismissed that application and ordered the applicants to pay the costs of Stennson (as first respondent). His Honour’s reasons are published in Natch v Stennson Pty Ltd [2022] FCA 641, which sets out the background to the litigation before Anastassiou J.

15    Accordingly, the applicants are liable for the costs of Stennson in both the principal proceeding and the appeal proceeding.

16    The parties did not reach agreement on the amount of costs payable, and Stennson initiated the taxation processes under Div 40.2 of the FC Rules. It is sufficient for present purposes to note that:

(a)    On 5 June 2023, Stennson filed a bill of costs under r 40.17 in both proceedings.

(b)    On 14 July 2023, the taxing officer issued a notice under r 40.20 in both proceedings estimating the approximate total for which, if the bills were to be taxed, the certificates of taxation would be likely to issue. The estimate in the principal proceeding was $168,452 and the estimate in the appeal proceeding was $23,298.

(c)    On 4 August 2023, the applicants filed notices of objection to the estimate of costs under r 40.21 in both proceedings.

(d)    On 1 May 2024, the applicants filed notices of objection to the bills of costs under r 40.25 in both proceedings.

(e)    On 26 June 2024, Stennson filed notices of response to the notices of objection under r 40.26 in both proceedings.

(f)    On 19 and 20 August 2024, a taxation hearing occurred before the taxing officer.

(g)    On 12 September 2024, the taxing officer 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.

17    On 7 October 2024, the applicants filed applications in both proceedings seeking:

(a)    a review of the taxation pursuant to r 40.34 of the FC Rules; and

(b)    a stay of execution of the costs in the certificates of taxation until the review is heard and determined, pursuant to r 40.35 of the FC Rules.

18    On 15 November 2024 in the principal proceeding and on 19 November 2024 in the appeal proceeding, I made orders granting the stay of execution of the costs in the certificates of taxation until the review is heard and determined, and made timetabling orders.

19    It is also relevant to note that, on 9 August 2024, the applicants filed an interlocutory application in the principal proceeding seeking discovery by Stennson of certain categories of documents in both proceedings (the discovery application). Although the application was only filed in the principal proceeding, it was treated by the parties and the taxing officer as an application in both proceedings. The discovery application was heard by the taxing officer during the taxation and effectively dismissed during the hearing. On 12 September 2024, the taxing officer made formal orders dismissing the discovery application.

20    On 1 October 2024, the applicants filed an application in the principal proceeding seeking a review of the taxing officer’s decision to dismiss the discovery application. On 15 November 2024, the applicants filed an equivalent application in the appeal proceeding. I heard that application on 16 December 2024 and, on 20 December 2024, I made orders dismissing the application: see Natch No 2. In the course of determining the discovery application, I heard arguments on a number of issues raised by the applicants including:

(a)    whether the bills of costs filed in both proceedings were not in compliance with the requirements of r 40.18 of the FC Rules and the significance of the non-compliance; and

(b)    whether there was any reason to suspect that the costs being sought by Stennson on its bills of costs breached the indemnity principle.

21    In respect of the form of the bills of costs, I found that the bills of costs filed by Stennson in each proceeding were not in accordance with Form 127 and, accordingly, did not comply with the requirements of r 40.18 (Natch No 2 at [34]). However, I also found that:

(a)    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 dated 20 August 2024 (at [42]); and

(b)    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]).

22    On the hearing of this taxation review, the applicants raised the defects in the form of the bills of costs as a ground of objection in disregard of the conclusions I reached in Natch No 2. As discussed below, that ground of objection lacked merit.

23    In respect of the indemnity principle, in Natch No 2 I concluded that none of the matters to which the applicants adverted provided a sufficient foundation for a suspicion that the costs being sought by Stennson on its bills of costs breached the indemnity principle (at [64]). On the hearing of this taxation review, the applicants also raised their concerns with respect to the indemnity principle as grounds of objection in disregard of the conclusions I reached in Natch No 2. As discussed below, those grounds of objection lacked merit.

Relevant principles

24    Rule 40.34 provides as follows:

40.34 Review by Court

(1)    A party who attended a taxation may apply to the Court for a review of the taxation and any consequential orders.

(2)    The application must be in accordance with Form 133 and state, briefly but specifically:

(a)    the items in the bill that are subject to challenge; and

(b)    whether the party wants the item included, deleted or varied and, if varied, the amount of the variation.

(3)    A party must not, on an application for review, raise any ground of objection, or response to an objection, not taken in the party’s notice under rules 40.25(1) or 40.26(1).

Note:     For the parties who may attend the taxation, see rule 40.27.

(4)    The application must be filed and served on all interested parties within 28 days after the issue of the certificate of taxation.

(5)    The Court may call for a written report from the taxing officer.

(6)    No further evidence will be received on the review.

Note:    The Court may exercise all of the powers of the taxing officer in relation to the items under review and may make any other orders, including altering the certificate of taxation or remitting an item to the same or any other taxing officer for taxation.

25    As can be seen, the rule prescribes that a taxation review is subject to two significant restrictions. First, a party must not raise any ground of objection that was not taken in the party’s notice of objection filed in accordance with r 40.25. Second, apart from the Court calling for a written report from the taxing officer, no further evidence is to be received on the review.

26    The character of a taxation review under r 40.34 was considered by Edelman J (as a judge of this Court) in Cassimatis v Australian Securities and Investments Commission [2016] FCA 131; 334 ALR 350 (Cassimatis). His Honour canvassed the relevant authorities in detail and concluded that while a review under s 40.34 has elements of a hearing de novo – in that the matter must be heard afresh and that it is not necessary to identify error in the taxing officer’s decision – it differs in that new evidence is not permitted on the review and the Court must take into account the conclusions reached by the taxing officer (at [12]-[14]).

27    Courts will review a decision of a taxing officer where it is contended that the decision is based on a wrong principle, and an error in principle may occur in both determining whether an item should be allowed or in determining how much should be allowed: Australian Coal and Shale Employees Federation v Commonwealth (1953) 94 CLR 621 (Australian Coal and Shale) at 628, citing Schweppes Ltd v Archer (1934) 34 SR (NSW) 178 (Schweppes v Archer) at 183-184; see also Cassimatis at [14]. However, as Jordan CJ observed in Schweppes v Archer (which observation was adopted in Australian Coal and Shale), where the question is one of amount only, the court will interfere only in an extreme case. A court may also review the decision of a taxing officer where no issue of principle is involved, and the matter relates only to the exercise of the taxing officer’s discretion: Australian Coal and Shale at 628. However, other than in exceptional circumstances, courts are generally reluctant to interfere with the exercise of discretion having regard to taxing officers’ particular expertise in assessing the costs in litigation: Cassimatis at [16], referring to Clark, Tait & Co v Federal Commissioner of Taxation (1931) 47 CLR 142 at 145–6 and Australian Coal and Shale at 628. As such, a court will generally only interfere where: (i) the discretion appears not to have been exercised at all; or (ii) the discretion has been exercised in a manner that is manifestly incorrect: Australian Coal and Shale at 628, citing Schweppes Ltd v Archer at 183-184; see also Cassimatis at [14].

Materials relied on

28    On 20 December 2024, I made orders permitting the applicants to file an amended application for review and supporting submissions limited to 10 pages, and for Stennson to file responsive submissions also limited to 10 pages.

29    As stated earlier, on 13 December 2024 the applicants appointed TLM Law to represent them in both proceedings. However, on 10 February 2025, Mr Natch terminated the retainer of TLM Law. The notice of termination was only in respect of Mr Natch and the second and third applicants continue to be represented by TLM Law.

30    The second and third applicants filed an amended application for review and supporting submissions on 18 February 2025. Apart from being late, the amended application and submissions were in a form contemplated by the Court’s orders.

31    Mr Natch filed an amended application for review and supporting submissions on 17 February 2025. In addition to being late, the submissions exceeded the length prescribed by the Court’s orders without Mr Natch first seeking the leave of the Court. In addition, Mr Natch filed the following documents which were not permitted by the Court’s orders and which conflicted with r 40.34(6) which stipulates that no further evidence will be received on the review:

(a)    a notice to admit addressed to Stennson dated 14 February 2025 containing some 42 asserted facts on which Mr Natch sought admissions;

(b)    an affidavit sworn by Mr Natch on 17 February 2025;

(c)    an affidavit sworn by Mr Natch on 18 February 2025; and

(d)    an affidavit sworn by Mr Natch on 21 March 2025.

32    The Court has power under r 1.34 to dispense with compliance with any of the rules. Accordingly, it is open to the Court to allow further evidence on a taxation review notwithstanding the terms of r 40.34(6). The discretionary decision to dispense with compliance with a rule such as r 40.34(6) must be exercised in accordance with the overarching purpose of civil practice and procedure stated in s 37M of the Federal Court of Australia Act 1976 (Cth) (FCA Act), which is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. During the hearing of the taxation review, I asked Mr Natch to address the Court on why the discretion ought to be exercised to permit him to rely on each of the further documents. Each of the documents is considered in turn.

Notice to admit

33    The notice to admit is addressed to Stennson and dated 14 February 2025. It contains some 42 asserted facts on which Mr Natch sought admissions. Mr Natch submitted that the asserted facts relate to the indemnity principle, which he had raised as a ground of objection (and sought to re-agitate on the taxation review). Mr Natch submitted that the facts on which admissions were sought would provide a foundation for a suspicion that the costs being sought by Stennson on its bills of costs exceeded the amount Stennson paid in costs. Having reviewed the notice to admit, I consider that none of the asserted facts relate to the grounds of objection raised by Mr Natch in his amended application, including the grounds relating to the indemnity principle. Further, even if the asserted facts had some bearing upon the indemnity principle, Mr Natch should not be permitted to seek to adduce further evidence on that issue on the taxation review by way of a notice to admit. Mr Natch had previously sought discovery of documents concerning that issue. The discovery application was refused by the taxing officer, and I refused an application to review that decision in Natch No 2. As discussed above, there is a strong public interest in maintaining the finality of litigation and Mr Natch’s attempt to circumvent the Court’s conclusion in Natch No 2 by serving the notice to admit should not be permitted. For that reason, during the hearing of the taxation review, I ordered that the notice to admit be struck out.

17 February 2025 affidavit

34    In his affidavit sworn on 17 February 2025, Mr Natch deposed to an email he received from the High Court Registry in relation to the names of the lawyers engaged in the proceeding on behalf of Stennson that are entered on the High Court Register. That email was exhibited to the affidavit. The content of Mr Natch’s 17 February 2025 affidavit largely replicates that of an earlier affidavit sworn by Mr Natch on 10 February 2025, where he deposed to a telephone call he had with a Registry Officer at the High Court who informed him that, while Mr Scotter’s name appears on the High Court Register, the names of Darren Cain and Dominic Brown do not.

35    The issue of whether Stennson’s lawyers in the proceeding had their names entered on the High Court Register was not raised in the applicants’ notice of objection on the taxation. However, having regard to the fundamental importance of the entitlement of legal practitioners to practice before the Court, I considered it appropriate to exercise the Court’s discretion under r 1.34 to dispense with compliance with r 40.34(6), and allow further evidence to be adduced concerning this issue on the taxation review. Stennson did not oppose leave being granted to Mr Natch to rely on his 17 February 2025 affidavit, and I accordingly granted that leave.

36    I also granted leave to Stennson to rely on a responsive affidavit of Mr Cain dated 6 March 2025. By that affidavit, 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 on 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. I accept that evidence. Relevantly, Mr Cain’s name did not appear on the Register at the points in time for which costs were sought for his work as a solicitor.

18 February 2025 affidavit

37    In Natch No 2, I made the following observations concerning a statement made by the legal representative of Stennson, Ms Terranova, during the taxation hearing on 19 August 2024:

20     On the issue of the indemnity principle, Ms Terranova stated at the hearing that she was instructed that the costs had been billed to Stennson and paid. The transcript records that Ms Terranova said (emphasis added):

Well, in relation to the indemnity principle, I can state from the bar table that the costs that were billed to the client, Stennson Proprietary Limited, are less than the costs that are sought to be recovered in the bill of costs, and they have been paid.

21     On the present application for review, Stennson submitted, and I accept, that the foregoing statement contains an error which was either made by Ms Terranova or was made by the transcript taker. As discussed below, the indemnity principle is that a party cannot recover an amount on account of costs that exceeds the amount paid by the party in costs. It is clear from the context that, at the taxation hearing, Ms Terranova either conveyed, or intended to convey, that the costs that were billed to Stennson were more than the costs that were sought to be recovered in the bills of costs.

38    By his affidavit sworn on 18 February 2025, Mr Natch sought to adduce evidence in support of the accuracy of the passage from the transcript of the taxation hearing quoted above. The evidence is irrelevant to this review. As can be seen from Natch No 2 at [21], I concluded that either the transcript contained an error or Ms Terranova misspoke. Assuming the transcript is correct, it is clear from the context that, at the taxation hearing, Ms Terranova intended to convey that the costs that were billed to Stennson were more than the costs that were sought to be recovered in the bills of costs. At the taxation review, I therefore refused to grant leave to Mr Natch to rely on his affidavit sworn on 18 February 2025.

21 March 2025 affidavit

39    Mr Natch’s affidavit of 21 March 2025 largely consisted of argument. During the review hearing, Mr Natch sought to rely on one evidentiary aspect relating to the prevailing market rates for the preparation of a bill of costs. This was evidence that could have been adduced by Mr Natch during the taxation review. There are no circumstances in the present case that warrant the exercise of the Court’s discretion under r 1.34 to dispense with compliance with r 40.34(6). At the taxation review, I therefore refused to grant leave to Mr Natch to rely on his affidavit sworn on 21 March 2025.

Grounds of objection raised by the second and third applicants

40    By their amended application for review filed in the principal proceeding, the second and third applicant raised the following grounds of objection:

1.     Each item of professional fees for solicitors’ work where the work was performed by a person who was not on the register of practitioners kept by the High Court of Australia in accordance with s 55C of the Judiciary Act 1903.

2.     Each item in the bill of costs as the bill was not in the proper form and contained material deficiencies due to omitting Part A. Further or alternatively, the total amount claimed may exceed the amount of the defendant’s liability for costs as the application of the indemnity principle is a genuine concern.

3.     The following items of the bill of costs are excessive and not supported by proper material:

a.     item 742;

b.     item 743; and

c.     disbursement items 5 to 10.

4.     Each item in the bill with loading of 15% applied be reduced to 0% on the basis that the loading sought is excessive.

41    The same grounds of objection were raised by the second and third applicants’ amended application for review filed in the appeal proceeding, save that ground 3 referred to items 109 and 110 of the bill of costs in the appeal proceeding.

42    Ultimately, the second and third applicants did not press ground 3 in the appeal proceeding or ground 4 in either proceeding.

43    As stated above, r 40.34(3) of the FC Rules prohibits, on an application for review, the raising of any ground of objection (or response to an objection) that was not taken in the party’s notice of objection that was before the taxing officer on the taxation. The applicants’ notice of objection before the taxing officer was dated 1 May 2024 and Stennson’s notice of response was dated 26 June 2024. As discussed below, certain of the grounds of objection raised by the amended applications for review were not raised by the applicants in their notice of objection before the taxing officer.

Ground 1

44    Ground 1, concerning the High Court Register, was not raised in the applicants’ notice of objection. Rule 40.34(3) would therefore ordinarily operate to prevent the ground being raised on the review of the taxation. Ultimately, Stennson did not object to this ground being raised by the applicants. In those circumstances, and for the reasons given earlier in the context of receiving new evidence on the review, I consider it appropriate to exercise the discretion under r 1.34 to dispense with the requirements of r 40.34(3) and permit the second and third applicants to raise ground 1.

45    The evidence established that Mr Cain’s name did not appear on the High Court Register at the points in time for which costs are sought for his work as a solicitor. The second and third applicants submitted that, in those circumstances, Stennson should only be permitted to recover costs in respect of work performed by Mr Cain at the rate of a non-solicitor (that is, a law clerk), relying on the principles stated in Jadwan Pty Ltd v Rae & Partners (A Firm) (No 7) [2022] FCA 1174 (at [27]-[37] and [40]).

46    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 at [108]), and urged that such an approach be taken in the case of Mr Cain. Specifically, Stennson submitted that the Court should exercise its discretion to fix a rate for Mr Cain at $395, being the midpoint between the rate of a clerk at $240 and the $550 rate settled upon by the taxing officer.

47    For the reasons already stated in Natch No 3 (at [57]-[59] and [63]), I uphold ground 1 and consider that Stennson’s costs should be assessed on the basis that costs incurred in respect of work performed by Mr Cain are recoverable at the rate of a law clerk. Mr Cain’s costs should therefore be assessed at the rate of $240 per hour. This applies to both the principal proceeding and the appeal proceeding.

Ground 2

48    Ground 2 consists of two separate objections.

49    The first objection relates to the bills of costs not being in a proper form. Stennson submitted that this contention was not raised in the notice of objection that was before the taxing officer, and therefore r 40.34(3) operates to prevent it from being raised on this review. During the review hearing, counsel for the second and third applicants, Mr Wolahan, acknowledged that the objection was not raised expressly in the notice of objection before the taxing officer, but submitted that the objection was raised indirectly by ground 6 of the notice of objection. Mr Wolahan asked the Court to take into account that the notice of objection was prepared by a self-represented litigant (being Mr Natch, who at the time appeared on behalf of all applicants). Ground 6 of the notice of objection that was before the taxing officer is as follows:

Applicant sought from the First Respondent and its solicitor the disclosure of the costs agreement between the First Respondent and its solicitor, all invoices rendered and the proof of payments from the First Respondents bank account to the Solicitor have not received these documents.

50    I do not consider that ground 6 of the notice of objection before the taxing officer raised an objection based on the form of the bills of costs. Accordingly, the ground cannot be raised on this review. In any event, the ground lacks merit. The defects in the bills of costs were addressed in Natch No 2 (at [39]-[44]) where 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 dated 20 August 2024, 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.

51    The second objection raised by ground 2 concerns compliance with the indemnity principle, which was the subject of findings in Natch No 2. It would be contrary to the overarching purpose in s 37M of the FCA Act to permit the matter to be reagitated. At the review hearing, Mr Wolahan did not press this objection.

52    Accordingly, ground 2 in both the principal proceeding and the appeal proceeding is rejected.

Ground 3

53    By ground 3, the second and third applicants objected to a small number of items on the basis that the costs were excessive and not supported by proper material. During the review hearing, Mr Wolahan informed the Court that the second and third applicants did not press this ground in respect of the appeal proceeding. In the bill of costs in the principal proceeding, the items are 742, 743 and disbursements 5 to 10. It was not in dispute that the objections to those items were included in the notice of objection before the taxing officer.

Item 742

54    Item 742 is an additional amount for skill, care and responsibility in the amount of $13,116.45, a loading of 15% on the costs otherwise claimed. The loading was reduced to 10% by the taxing officer on the taxation. The second and third applicants submitted that the loading on this item is excessive given other costs allowed including as to counsel fees, and that it is not properly supported given it is a general assertion as to work done. The second and third applicants further submitted that, as most of the work was performed by Mr Cain, who was not entitled to practice as a solicitor in this Court (because his name was not on the High Court Register), it is appropriate that the loading be reduced to reflect that circumstance. The second and third applicants submitted that the Court ought to exercise its discretion and reduce the loading to 5%.

55    I do not accept that it is appropriate to reduce the loading under this item by an additional amount by reason that Mr Cain performed most of the work. As discussed in the context of ground 1, the bills of costs will be adjusted to reflect the fact that Mr Cain was not entitled to practice as a solicitor in this Court and that his fees should reflect those of a law clerk. Despite that, it remains appropriate to allow an additional amount for skill, care and responsibility. Whilst Stennson will only be permitted to recover the costs of Mr Cain at the rate of a law clerk, it should be accepted that Mr Cain, as an experienced solicitor, brought a high degree of skill, care and responsibility to the work performed. A question arises whether the 10% loading allowed by the taxing officer should, in the circumstances, be increased to 15%. Overall, I consider that the percentage loading allowed by the taxing officer should be retained.

56    Addressing the arguments of the second and third applicants more generally, Mr Wolahan was unable to point to any error of principle in the taxing officer’s decision on this item. Where the question is one of amount only, the court is reluctant to interfere with the exercise of the taxing officer’s discretion having regard to their expertise in assessing the costs in litigation. In the present case, it is clear that the taxing officer exercised judgment with respect to the loading (reducing it from 15% to 10%), and there is no manifest error in the judgment exercised. In those circumstances, I do not consider that there is a sound basis on which to further reduce the loading.

57    For the foregoing reasons, I reject the objection to item 742.

Item 743

58    Item 743 is an amount of professional fees calculated by folio for preparing the bill of costs, in the amount of $15,535. The second and third applicants submitted that this amount ought to have been claimed under item 2.5 of Sch 3 of the FC Rules and determined accordingly, that is, ‘at a rate to be determined by the taxing officer’. They also submitted that the amount is excessive for the proceeding and that the moneys for preparing the bill ought be claimed as a disbursement rather than as professional fees given that a costs consultant appeared at the taxation hearing and prepared the amended bill of costs.

59    Again, Mr Wolahan was unable to point to any error of principle in the taxing officer’s decision on this item. It is clear that the taxing officer exercised judgment with respect to this item and there is no manifest error in the judgment exercised. In those circumstances, I do not consider that there is a sound basis on which to vary the amount allowed. I therefore reject the objection in respect of item 743.

Disbursement items 5 to 10

60    Disbursement items 5 to 10 are costs claimed for transcript fees totalling $5,763.80. The second and third applicants submitted that these costs appear to be excessive given that Stennson would have had access to the transcript made available to the three other respondents to the principal and appeal proceedings.

61    I accept Stennson’s submissions that this matter was addressed by the taxing officer during the taxation hearing and that there is no basis to interfere with the taxing officer’s decision in relation to these items. I therefore reject the objection in respect of disbursement items 5 to 10.

62    Accordingly, ground 3 in the principal proceeding is rejected.

Grounds of objection raised by Mr Natch

63    By his amended application for review of the taxation filed in the principal proceeding, Mr Natch raised the following 12 grounds of objection in respect of the bill of costs in that proceeding (errors in original):

1.     All costs items 1 to 759 and the disbursements 1 to 15 are subjected to challenge for the incompetent bill of costs filed in breach of rule 40.18 which was substantially noncompliant and which :

a.     was not a Form 127;

b.     did not contain Part A, Part B and Part C;

c.     Disbursements were claimed as costs and breached Part F of Costs Practice Note.

d.     Was not served on all parties to the bill of costs pursuant to rule 40.19 and Section 5.10 of the Federal Court Costs Practice Note.

2.     All Cost Items 1 to 759 and the disbursements 1 to 15 in the bill of costs are subject to challenge, in part as the First Respondent’s entire claim may offend and be in breach of the indemnity principle mandated by FCR 40.18 with the Bill of Costs requiring Part A certification and mandated at Section 3.16 of the Federal Court Costs Practice Note. There is no certification provided under Part A the subsequent certification by Darren Cain in his affidavit of 19 August 2024 does not meet the requirements of Part A in the Federal Court as mandated under Section 3.16 of the Federal Court Costs Practice Note GPN-Costs to certify. This was sought during the taxation hearing and was refused by the registrar.

3.     All Cost Items 1 to 759 and the disbursements 1 to 15 in the bill of costs are subject to Challenge for breach of indemnity principle. Applicant seek the production pursuant to FCR 40.28(c) the costs agreement, payment confirmations and file notes to verify the indemnity principle is not breached. No liability of the First Respondent to its solicitor is established. This was sought during the taxation hearing and was refused by the registrar.

4.     All Cost Items 1 to 759 and the disbursements 1 to 15 in the bill of costs are subject to challenge for breach of indemnity principle. Applicant pursuant to FCR 40.28(c) seek the production for inspection of the legal files of the First Respondent in VID569/2019. This was sought during the taxation hearing and was refused by the registrar.

5.     All Cost Items 1 to 759 and the disbursements 1 to 15 in the bill of costs are subject to challenge. Applicant pursuant to FCR 40.28(c) seek the production of cost sharing arrangements between the First Respondent and other respondents and/or insurers to verify the indemnity principle. This was sought during the taxation hearing and was refused by the registrar.

6.     Applicant seek the costs items – [item numbers not reproduced] – be varied for these items to be reduced to Federal Court Rules 2011 - Schedule 3 Section 1.2 to $24 for 6 minutes as the legal practitioner is not registered in the Practitioners Register of the High Court to practice in the Federal Court as per the Requirement of Section 55C of Judiciary Act 1903(Cth). This was sought during the taxation hearing and was refused by the registrar.

7.     Applicant seek the cost item 742 to be disallowed for the same reason as paragraph 6. Should be disallowed when the Registrar during the taxation concluded the proceeding VID569/2019 as far as the First Respondent was concerned was fairly simple and straightforward case and was not a complex case. Hence does not warrant a claim of loading in lieu of the Practitioner being not registered to practice in the Federal Court. The loading should be varied to 0% considering the practitioner is unregistered or in the other alternate the court should reduce the loading to 5% which is the standard rate and the 5% should be considered on the total professional costs once the variations in paragraph 6 variations are applied.

8.     Applicant seek the cost item at 743 be disallowed it is not a cost item but a disbursement wrongly claimed to be costs it is in breach of FCR 40.18 as a disbursement it should have been claimed as a disbursement and the invoice adduced to the bill of costs which was not done. The amount of $15,535 being claimed for preparing bill of costs with one counsel fees and no expert witness disbursements is quite high. The normal market rate for preparation of bill of costs is typically 10% of the total professional costs which in this case needs to be determined applying the variation to the professional fees at paragraph 6.

9.     Applicant pursuant to FCR 40.28(a) seek examination of Leon Mrocki and Darren Cain during the review.

10.     Cost Items 1 to 759 and the disbursements 1 to 15 in the bill of costs are subject to challenge. The failure of the First Respondent to file a proper bill of costs it as been on notice from 19 August 2024 that the bill of costs filed in incompetent and not according to Division 40.2 of the Federal Court Rules it failed to rectify the deficiency to file a competent bill of costs explaining to the court why the court should dispense with the rules and Applicant pursuant to FCR 40.15(1)(b) seek in the alternate the court order a nominal sum of $2000 in costs of the First Respondent.

11.     Applicant seek the professional costs fee of $9473 adduced during the taxation hearing to be disallowed or varied. Similarly, Applicant seek the disbursements of $11,280 adduced during the taxation hearing should be disallowed since no invoices have been produced for the same. It should be disallowed or varied. The Professional fee of $9473 and disbursements of $11,280 allowed during the taxation hearing should be disallowed as the amended assessment factoring Paragraph 6 above the Applicants taxed costs will beat the estimate of the court issued in this proceeding.

12.     Applicant seeks the disbursement items 5 to 10 be disallowed.

64    Mr Natch’s amended application for review of the taxation filed in the appeal proceeding raised grounds of objection 1 to 11 in respect of the bill of costs in that proceeding.

65    Many of the grounds of objection overlap with the grounds raised by the second and third applicants. Only one of the grounds is upheld, being ground 6 which concerns the recovery of costs in respect of work performed by Mr Cain whose name was not registered on the High Court Register. All other grounds are rejected for the reasons given below.

Grounds 1 and 10

66    The objection in grounds 1 and 10 largely concerns the form of the bills of costs. To that extent, the ground overlaps with the first objection in ground 2 raised by the second and third applicants. As stated above in that context, the objection was not raised in the notice of objection before the taxing officer. Further and in any event, the objection lacks merit for the reasons given in Natch No 2 at [39]-[44]. For that reason, I reject the objection in both the principal and the appeal proceeding.

67    In so far as ground 1 contends that the respective bills of costs were not served, it is clear from the transcript of the taxation hearing that the bills of costs were served on Mr Natch. At that time, Mr Natch was representing all of the applicants. Accordingly, the objection is devoid of merit. It is accordingly rejected in both the principal and the appeal proceeding.

Grounds 2, 3, 4 and 5

68    The objection in grounds 2, 3, 4 and 5 are all based on Mr Natch’s contention that the costs being sought by Stennson may be in breach of the indemnity principle. That objection overlaps with the second objection in ground 2 raised by the second and third applicants. As stated above in that context, the objection was the subject of findings in Natch No 2. It would be contrary to the overarching purpose in s 37M of the FCA Act to permit the matter to be reagitated. I therefore reject those grounds in both the principal and the appeal proceeding.

Ground 6

69    The objection in ground 6 concerns the recovery of costs in respect of work performed by Mr Cain whose name was not registered on the High Court Register. The objection overlaps with the first objection raised by the second and third applicants. For the reasons given above in that context, I consider that Stennson’s costs should be assessed on the basis that costs incurred in respect of work performed by Mr Cain are recoverable at the rate of a law clerk. Mr Cain’s costs should therefore be assessed at the rate of $240 per hour in both the principal and the appeal proceeding.

Ground 7

70    The objection in ground 7 concerns item 742 of the bills of costs which is an additional amount for skill, care and responsibility. The bill of costs included a loading of 15% on the costs otherwise claimed, but the taxing officer reduced the loading to 10%. The objection overlaps with the objection in ground 3(a) raised by the second and third applicants. For the reasons given in that context, I reject the ground in both the principal and the appeal proceeding.

Ground 8

71    The objection in ground 8 concerns item 743 of the bills of costs which is an amount of professional fees calculated by folio for preparing the bill of costs. The objection overlaps with the objection in ground 3(b) raised by the second and third applicants. For the reasons given in that context, I reject the ground in both the principal and the appeal proceeding.

Ground 9

72    Ground 9 does not contain an objection; rather, it appears to be a request to examine two individuals pursuant to r 40.28(a). The ground is misconceived. It is contrary to r 40.34(6) which stipulates that no further evidence will be received on the review. It is therefore rejected in both the principal and the appeal proceeding.

Ground 11

73    Ground 11 concerns the costs of the taxation which were awarded in favour of Stennson pursuant to r 40.33. The transcript of the hearing on 12 September 2024 indicates that the amount awarded was professional costs of $9,473 and disbursements of $11,280, being a total of $21,203. Those costs were allocated on a 50-50 basis to each of the principal proceeding and the appeal proceeding.

74    In his written submissions, Mr Natch submitted that, assuming ground 6 is upheld (reducing the costs allowed in respect of the work performed by Mr Cain), the amount of the costs will be taxed at less than 85% of the taxing officer’s estimate. In those circumstances (and implicitly relying on r 40.33(1)(b)), Mr Natch submitted that Stennson should not receive its costs of the taxation.

75    Ground 6 has been upheld which means that Stennson’s taxed costs will be reduced. While the necessary calculations are yet to be performed, it is possible that the costs will be taxed at less than 85% of the taxing officer’s estimate. Despite that, I consider that Stennson should continue to be awarded its costs of the taxation in those amounts. That is for two reasons. First, ground 6 was not raised in the applicants’ notice of objection, with the result that Stennson had no opportunity to consider and respond to the objection prior to or at the taxation hearing. Second, the conduct of the applicants at the taxation hearing added significantly to the cost of the taxation (as per r 40.33(2)(b)). The transcript of the taxation hearing demonstrates that the applicants raised numerous unmeritorious arguments.

76    For those reasons, ground 11 is rejected in both the principal and the appeal proceeding.

Ground 12

77    The objection in ground 12 concerns disbursement items 5 to 10 of the bill of costs in the principal proceeding. The objection overlaps with the objection in ground 3(c) raised by the second and third applicants. For the reasons given in that context, I reject the ground. Mr Natch did not raise an equivalent ground in the appeal proceeding.

Assessment of taxation

78    For the reasons given above, the certificates of taxation issued in each of the principal and appeal proceedings (both dated 12 September 2024) should be varied to account for the fact that Mr Cain was not registered on the High Court Register. The fees allowed for work performed by Mr Cain should be reduced to $240 per hour 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. Otherwise, there is no reason to interfere with the taxing officer’s assessment.

79    Given the history of disputation in these proceedings, I consider it unlikely that the parties will agree the arithmetic adjustments to be made to the certificates of taxation. I will therefore order, in each proceeding, that:

(a)    Stennson file and serve an affidavit verifying the following:

(i)    a copy of the original bill of costs (excluding annexures) with the adjustments made pursuant to the taxing officer’s rulings and the further adjustment to Mr Cain’s fees as required by these reasons;

(ii)    the amount payable to Stennson on the taxation, including the costs of the taxation;

(b)    the applicants file and serve a submission confirming their agreement to the arithmetic calculations performed by Stennson or stating, with reasons, their disagreement; and

(c)    the arithmetic adjustments be determined by the Court on the papers.

Costs of the taxation review

80    The final matter to be determined concerns the costs of the taxation review. Section 43 of the FCA Act gives the Court a broad discretion in awarding costs. The discretion must be exercised judicially, by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation: Northern Territory v Sangare (2019) 265 CLR 164 at [24]. Section 37N(4) stipulates that the Court, in exercising its discretion, must take account of any failure to comply with the duties imposed by ss 37N(1) and 37N(2) to conduct litigation in a way that is consistent with the overarching purpose, including by the advancing of unmeritorious arguments.

81    Although the applicants have been successful in respect of one ground of objection, I consider that Stennson should be awarded the costs of the review, calculated as a lump sum to avoid further disputation. There are two reasons for awarding costs in favour of Stennson. First, the ground of objection upon which the applicants have been successful was not raised by the applicants in their notice of objection on the taxation. If it had been raised, the objection would have been dealt with by the taxing officer without the need for a further contested hearing. Second, the applicants raised numerous unmeritorious objections. The objections caused wasted costs in circumstances where, for some of the objections, the Court had previously ruled on the objections in Natch No 2, and for others, the objection had not been raised in the applicants’ notice of objection on the taxation.

82    In the circumstances, costs in the amount of $8,815 should be awarded in favour of Stennson comprising:

(a)    the costs of $3,815 incurred by Stennson’s counsel and solicitors in the period of October to 15 November 2024 in respect of the taxation review which was subtracted from the costs assessment undertaken in Natch No 3 (see [61] and [64]); and

(b)    pursuant to r 40.02(b) of the FC Rules, an additional lump sum of $5,000 in respect of the costs of the taxation review in the period from 31 January 2025.

83    In determining to award the lump sum and the appropriate quantum to be awarded I have had regard to the principles summarised in Urban Alley Brewery Pty Ltd v La Sirène Pty Ltd (No 2) [2020] FCA 351 at [34]-[37]. It is unnecessary to repeat those principles here.

84    A question arises whether those 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 material 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.

85    Stennson will also be afforded an opportunity to apply for a different costs order under r 40.02 of the FC Rules.

Associate:

Dated:    15 May 2025