Federal Court of Australia

Natch v Stennson Pty Ltd (No 5) [2025] FCA 807

ORDERS

THE COURT NOTES THAT:

A.    On 19 May 2025, the respondent filed and served an application, pursuant to order 5 of the orders of the Court made on 15 May 2025 (15 May Orders), seeking a costs order different to order 4 of the 15 May Orders.

B.    Pursuant to order 8 of the 15 May Orders, order 4 of the 15 May Orders was vacated.

THE COURT ORDERS THAT:

1.    The certificate of taxation issued on 12 September 2024 be varied by deleting the amount of $197,996.72 and substituting the amount of $154,377.86.

2.    The applicants pay the respondent’s costs of the taxation review fixed in the amount of $8,815.

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

ORDERS

THE COURT ORDERS THAT:

1.    The certificate of taxation issued on 12 September 2024 be varied by deleting the amount of $31,631.75 and substituting the amount of $26,238.25.

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 (being Mohan Natch, Mohan Natch and Karan Natch in their capacity as Executors and Trustees of the Will of Andal Natch, and Owners Corporation Plan No SP026738V) 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 (the principal proceeding) and proceeding number VID 720 of 2021 (the appeal proceeding) (together, the proceedings).

2    The background to the proceedings is set out in Natch v Stennson Pty Ltd (No 4) [2025] FCA 473 (Natch No 4). These reasons assume familiarity with that decision and with earlier decisions in the proceedings. For present purposes it suffices to note:

(a)    orders for costs were made against the applicants jointly and severally;

(b)    the costs were taxed by a Judicial Registrar of the Court as taxing officer and certificates of taxation were issued in each proceeding; and

(c)    the applicants subsequently 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).

3    The certificates of taxation in each of the proceedings were issued on 12 September 2024 and were in the following amounts:

(a)    in the principal proceeding, the amount of $197,996.72; and

(b)    in the appeal proceeding, the amount of $31,631.75.

4    The amounts stated in the certificates of taxation included an amount in respect of the costs of the taxation in each proceeding, which were assessed by the Registrar at $21,303 (comprising professional fees of $9,473 and disbursements of $11,830). Those costs were allocated on a 50-50 basis ($10,651.50) to each of the principal proceeding and the appeal proceeding (see Transcript of the taxation hearing on 12 September 2024 at pp 9 and 10).

5    Since 10 February 2025 the first applicant, Mr Natch, has been self-represented (having terminated the retainer of his previous lawyers, TLM Law (see Natch No 4 at [7]). The second and third applicants have continued to be represented by TLM Law.

6    In Natch No 4, I rejected all but one of the applicants’ grounds of objection raised on the taxation review. The applicants’ only successful ground concerned the fact 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) and was therefore not entitled to practice as a solicitor in this Court. In such circumstances, I determined the costs allowed in respect of Mr Cain’s work on the proceeding should be reduced from the rate of $550 per hour (excl. GST) determined by the taxing officer to $240 an hour (excl. GST), being the rate of an unqualified legal clerk. By accompanying orders made on 15 May 2025, the parties were required 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 fees allowed for Mr Cain.

7    As explained in Natch No 4, although the applicants were successful in respect of one ground of objection on the taxation review, that ground was not raised before the taxing officer and the applicants’ conduct of the taxation review occasioned substantial wasted costs. In those circumstances, I considered it appropriate to award Stennson costs on a lump sum basis in respect of the costs of the taxation review, fixed in the amount of $8,815. However, the orders also afforded Stennson an opportunity to apply for a different costs order under r 40.02 of the FC Rules, and it did so on 29 May 2025.

8    These reasons concern:

(a)    the arithmetic adjustments to be made to the certificates of taxation reflecting the reduction in fees allowed for Mr Cain; and

(b)    the appropriate order to be made in respect of the costs of the taxation review.

Adjustments to certificates of taxation

9    On 15 May 2025, I made orders in each of the principal and appeal proceedings in the following terms:

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.

10    Pursuant to order 1, Stennson filed an affidavit affirmed by Mr Cain on 29 May 2025, which annexed adjusted bills of costs in respect of both proceedings, along with an adjusted schedule of professional fees and a record of disbursements incurred in respect of the taxation. Mr Cain filed a second affidavit on the same day correcting an error in one of the annexures to his affidavit. Mr Cain deposed to his verification of the following amounts (all excl. GST):

(a)    in respect of the professional costs and disbursements in the principal proceeding, the adjusted sum of $146,252.09;

(b)    in respect of the professional costs and disbursements in the appeal proceeding, the adjusted sum of $18,414.75; and

(c)    in respect of the costs of the taxation in both proceedings, the adjusted sum of $17,291.

11    There were multiple discrepancies in Mr Cain’s affidavit which I have resolved in the following manner:

(a)    At para 8 of his affidavit, Mr Cain verified the adjusted sum for the professional costs and disbursements in the principal proceeding in the amount of $146,252.09. However, the adjusted bill of costs that was annexed to the affidavit contained a figure for the total costs and disbursements of $146,452.09. Worse still, the bill of costs contained a figure for the total professional costs of $71,689.09 and a figure for total disbursements of $74,513.27, the sum of which is $146,202.36. The bill of costs was lengthy (with more than 750 items), and was not in a form that enabled the Court itself to verify the arithmetic sum of the cost items. In those circumstances, I have adopted the arithmetic sum of the figures in the bill of costs for total professional costs and total disbursements, being $146,202.36.

(b)    At para 12 of his affidavit, Mr Cain verified the adjusted sum for the professional costs and disbursements in the appeal proceeding in the amount of $18,414.75. While the adjusted bill of costs that was annexed to the affidavit contained a figure for the total costs and disbursements in that amount, the bill of costs contained a figure for the total professional costs of $9,802.75 and a figure for total disbursements of $8,000, the sum of which is $17,802.75. Again, the bill of costs was lengthy and was not in a form that enabled the Court itself to verify the arithmetic sum of the cost items. In those circumstances, I will adopt the arithmetic sum of the figures in the bill of costs for total professional costs and total disbursements, being $17,802.75.

(c)    At para 15 of his affidavit, Mr Cain deposed that the Registrar allowed an amount of $9,743 in respect of professional fees incurred on the taxation in both proceedings. However, the transcript of the hearing before the Registrar on 12 September 2024 (at p 9) states that the Registrar allowed an amount of $9,473 (which was also the basis for a finding made in Natch No 4 at [73]). The figure of $9,473 also appears in the schedule of fees provided to the Registrar in connection with the taxation, as annexed to Mr Cain’s second affidavit. In those circumstances, I consider the figure stated in the transcript to be the correct figure.

12    On 10 June 2025, the applicants filed joint submissions in respect of the adjustments to the certificates of taxation. The submissions were stated to be prepared by both Mr Natch (the first applicant) and TLM Law (on behalf of the second and third applicants), and are summarised as follows.

13    In respect of the principal proceeding, the applicants agree with Stennson’s adjustments to the bill of costs save for submitting that:

(a)    item 522 should be reduced by $408, to account for the fact that 1 hour of Mr Cain’s time is incorrectly recorded as $648, rather than the reduced rate of $240 per hour determined by the Court; and

(b)    item 653 should be reduced by $62, to account for the fact that 2 units of Mr Cain’s time are incorrectly recorded as a total of $110, rather than the reduced rate of $24 per unit (for a total of $48) determined by the Court.

14    Having reviewed the adjusted bill of costs in respect of the principal proceeding annexed to Mr Cain’s affidavit, I accept that the further reductions proposed by the applicants are correct. The applicants submitted that, making the above reductions, the total costs and disbursements should be $145,732.36. It is apparent that the applicants have deducted the sum of $470 from the amount of $146,202.36. I accept the applicants’ calculation.

15    In respect of the appeal proceeding, the applicants agree with Stennson’s adjustments to the bill of costs save for submitting that:

(a)    item 5 should be reduced by $140, to account for the fact that the fee for 4 units of Mr Cain’s time is incorrectly recorded as $236, rather than the amount of $96 (given by the reduced rate of $24 per unit determined by the Court); and

(b)    item 63 should be reduced by $70, to account for the fact that the fee for 2 units of Mr Cain’s time is incorrectly recorded as $118, rather than the amount of $48 (given by the reduced rate of $24 per unit determined by the Court).

16    Having reviewed the adjusted bill of costs in respect of the appeal proceeding annexed to Mr Cain’s affidavit, I accept that the further reductions proposed by the applicants are correct. The applicants submitted that, making the above reductions, the total costs and disbursements should be $17,592.75. It is apparent that the applicants have deducted the sum of $210 from the amount of $17,802.75. I accept the applicants’ calculation.

17    The applicants do not dispute Stennson’s calculations with respect to the costs of the taxation (both disbursements and professional fees), and accept that the correct sum is $17,291 (consisting of disbursements of $11,830 and professional fees in the adjusted sum of $5,461). Consistently with the approach taken by the Registrar, I will allocate the costs of the taxation between the principal proceeding and the appeal proceeding on a 50:50 basis ($8,645.50 to each proceeding).

18    It follows from the foregoing that the certificates of taxation issued on 12 September 2024 in each proceeding should be varied to the following amounts:

(a)    in respect of the principal proceeding, the amount stated in the certificate of taxation should be varied to $154,377.86 (being the sum of $145,732.36 and $8,645.50); and

(b)    in respect of the appeal proceeding, the amount stated in the certificate of taxation should be varied to $26,238.25 (being the sum of $17,592.75 and $8,645.50).

Costs of the taxation review

19    As stated above, in Natch No 4, I determined that a lump sum of $8,815 should be awarded in favour of Stennson in respect of the costs of the taxation review. It is convenient to reproduce the reasons given for awarding that amount (at [80]-[84]):

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.

20    Immediately following the delivery of judgment in Natch No 4, Stennson sought an opportunity to apply for a different costs order in respect of the taxation review. On 15 May 2025 I made orders facilitating such an application, as follows:

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.

Stennson’s application

21    Stennson made an application pursuant to order 5 by filing a third affidavit affirmed by Mr Cain on 29 May 2025. Stennson elected not to file written submissions in support of the application. Mr Cain’s affidavit did not address the Court’s reasons in Natch No 4 at [80]-[84] for awarding a lump sum of $8,815 in favour of Stennson. Mr Cain’s affidavit merely verified the legal costs actually incurred by Stennson in respect of the taxation review.

22    In his third affidavit, Mr Cain confirmed that Stennson accepts the lump sum assessment made by the Court in respect of the period until 15 November 2024, being the amount of $3,815 (as referred to in Natch No 4 at [82(a)]).

23    In respect of the period from 15 November 2024 to the delivery of judgment in Natch No 4 on 15 May 2025, Mr Cain verified that Stennson incurred the following costs (excl GST):

(a)    $20,125 in counsel fees;

(b)    $21,114 in professional costs comprising:

(i)    $11,730 in the period to 23 February 2025; and

(ii)    $9,384 in the period to 15 May 2025.

24    In respect of the period from the delivery of judgment in Natch No 4 to the date of the affidavit, Mr Cain verified that Stennson incurred the following costs (excl GST):

(a)    $250 in counsel fees;

(b)    $1,560 in cost consultant fees; and

(c)    $1,725 in professional costs.

25    Mr Cain deposed that Stennson does not seek a lump sum costs order (on a party/ party basis) for the total amount of professional costs set out above (being $22,839). Mr Cain deposed that Stennson considers that the following reductions to the professional costs are appropriate:

(a)    a reduction of $1,794 for certain attendances between 16 January and 8 March 2025 (the reason for which was not explained);

(b)    in respect of the period up to 23 February 2025 (on which date Mr Cain’s name was entered on the High Court Register), a reduction of $6,727.50 to account for the fact that Mr Cain’s name was not entered on the High Court Register during this period and that the Court determined his fees should be assessed at the unqualified law clerk rate of $240 per hour; and

(c)    in respect of the period from 24 February to 29 May 2025, a reduction of $2,125.20 reflecting a reduction in Mr Cain’s charge rate from $690 per hour to $550 per hour as assessed by the taxing officer during the hearing of the taxation.

26    Subject to those reductions to professional costs, Stennson sought recovery of the entirety of its legal costs. As noted above, Stennson did not file written submissions, and Mr Cain’s affidavit did not address the Court’s reasons in Natch No 4 for awarding a lump sum amount of $8,815.

The second and third applicants’ submissions

27    The second and third applicants filed responsive submissions on 18 June 2025. Like Stennson, the second and third applicants did not address the Court’s reasons for awarding costs in favour of Stennson in a lump sum amount of $8,815.

28    The second and third applicants contend that the appropriate order on the costs of the taxation review is that there be no order as to costs. In support of that contention, they advanced the following submissions.

29    First, they submitted that some of the costs claimed by Stennson are already the subject of an earlier costs order. On 22 January 2025, the applicants filed an application (which was allocated proceeding number VID 57 of 2025) for leave to appeal against the decision in Natch v Stennson Pty Ltd (No 2) [2024] FCA 1498 (Natch No 2), and also applied for a stay of the orders made in Natch No 2. The application for the stay was heard and dismissed by Snaden J on 7 February 2025 (see Natch v Stennson Pty Ltd [2025] FCA 69), and his Honour ordered that Stennson’s costs on the stay application be fixed in the sum of $3,000. The second and third applicants identify counsel fee items totalling $3,000 and professional fee items totalling $414 that are attributable to work already the subject of Snaden J’s order. I accept that submission and have taken it into account in determining the appropriate lump sum to be awarded.

30    Second, the applicants submitted that they were successful on the taxation review on one of the grounds of objection, being the reduction in Mr Cain’s fees because his name was not entered on the High Court Register. That submission can be accepted. However, the applicants fail to address the additional matters considered in Natch No 4, being that:

(a)    the applicants failed to raise the ground of objection before the taxing officer (and, if it had been raised, the objection would have been dealt with by the taxing officer without the need for a further contested hearing); and

(b)    the applicants raised numerous other grounds of objection which were unsuccessful.

31    In that context, the second and third applicants placed reliance on r 40.33 of the FC Rules. The reliance was misplaced. Rule 40.33 concerns the costs of the taxation before the taxing officer (not the costs of a review of taxation), and requires a comparison between the taxing officer’s estimate (made under r 40.20) and the taxed amount. Relevantly, the rule stipulates that, on a taxation, an objecting party must pay the costs of the taxation unless the costs are taxed at less than 85% of the taxing officer’s estimate. As it turns out, the taxed costs as determined in Natch No 4 are not less than 85% of the taxing officer’s estimate, as shown in the following table:

32    Third, the applicants submitted that, by reason of the necessary reduction in Mr Cain’s fees, additional costs have been incurred by Stennson in calculating the required adjustments to the bills of costs (as otherwise adjusted by the taxing officer). The applicants submitted that they should not be required to bear those additional costs. Those costs include the costs consultant fee of $1,560. I accept that submission.

33    Fourth, the applicants submitted that the amount claimed by Stennson in respect of the taxation review is excessive. I accept that submission, but only in part. As I stated in Natch No 4 (at [81]), 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’ notices of objection on the taxation. Nevertheless, taking those matters into account, I consider that the costs incurred by Stennson on the review are excessive. Stennson incurred costs of approximately $40,000 on a review of taxation where the taxed costs were approximately $180,000 (in aggregate). Stennson is, of course, entitled to defend the taxation review in the manner it chooses, but the Court will only permit it to recover costs reasonably incurred.

Mr Natch’s submissions

34    Mr Natch also filed responsive submissions on 18 June 2025. The submissions substantially exceeded the length (of 4 pages) permitted by the Court’s orders. Mr Natch did not explain why he considered himself at liberty to ignore the Court’s orders. Like the other parties, Mr Natch did not address the Court’s reasons for awarding costs in favour of Stennson in a lump sum amount of $8,815.

35    Mr Natch contends that the Court should order that Stennson pay his costs of the taxation review. In the alternative, Mr Natch contends that he should be granted a costs certificate under s 6 of the Federal Proceedings (Costs) Act 1981 (Cth). As a further alternative, Mr Natch contends that there should be no order of costs on the taxation review. In support of those contentions, Mr Natch advanced the following submissions.

36    First, Mr Natch submitted that Stennson breached its overarching obligations, referring to the Civil Procedure Act 2010 (Vic).  In making that submission, Mr Natch reagitated arguments advanced on the taxation review, which were rejected. In addition, Mr Natch relied on the fact that Mr Cain sought to recover costs as a solicitor when his name was not entered on the High Court Register. I also reject the submission that that circumstance involved a breach of the overarching obligations applicable in Federal Court proceedings (stated in Pt VB of the Federal Court of Australia Act 1976 (Cth)). Overall, Mr Natch’s submission has no merit and I reject it.

37    Second, Mr Natch alleged various deficiencies in the Federal Court’s Costs Practice Note which he claims occasion “serious prejudice on costs respondents”. In essence, Mr Natch submitted that the Practice Note provides insufficient guidance to litigants participating in a taxation of costs. I reject that submission. Throughout the principal and appeal proceedings, Mr Natch has from time to time appointed legal representatives and then dismissed those legal representatives. He elected to participate in the taxation hearing without legal representation. The transcript of the taxation hearing reveals that Mr Natch was unwilling to accept guidance from the taxing officer with respect to matters that might properly be raised on the taxation. Other matters raised by Mr Natch lacked merit. In the circumstances, Mr Natch’s complaint about the content of the Court’s Practice Note is unjustified.

38    Third, Mr Natch submitted that the applicants acted reasonably in making the taxation review application. I accept that making the application was reasonable and, as already noted, the application was successful in respect of one ground of review. However, the conduct of the review by Mr Natch was unreasonable. As I found in Natch No 4 at [81], 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.

39    Finally, Mr Natch submitted that the entirety of Stennson’s costs incurred in respect of the taxation review should be disallowed by reason of their being excessive. As noted above, the second and third applicants advanced the same submission. For the reasons given above, I accept the submission in part.

40    Despite advancing a contention that he should be granted a costs certificate under s 6 of the Federal Proceedings (Costs) Act 1981 (Cth), Mr Natch did not otherwise advance any submissions concerning the application of that provision. Section 6 applies to Federal appeals, which are defined in s 3 of that Act. The taxation review was not a Federal appeal as defined. Accordingly, s 6 has no application.

Resolution

41    As indicated above, I accept the second and third respondents’ submissions that:

(a)    some of the costs claimed by Stennson are already the subject of an earlier costs order;

(b)    the costs order should reflect the fact that the applicants were successful on one ground of review; and

(c)    the amount claimed by Stennson on account of its costs is excessive and out of proportion to the costs award made in the proceedings.

42    As noted earlier, in Natch No 4 at [81], I concluded that, although the applicants were successful in respect of one ground of objection, Stennson should be awarded costs in respect of the review in light of the facts that:

(a)    the ground of objection upon which the applicants were successful was not raised by the applicants in their notice of objection on the taxation and, if it had been raised, the objection would have been dealt with by the taxing officer without the need for a further contested hearing; and

(b)    the applicants raised numerous unmeritorious objections which occasioned substantial wasted costs.

43    At the time of the decision in Natch No 4, I considered it appropriate to make a lump sum award of $8,815 in Stennson’s favour. The amount of $3,815 related to costs incurred prior to 15 November 2024. The amount of $5,000 was a lump assessment of costs I considered to be reasonable having regard to the considerations identified in the preceding paragraph.

44    Having considered all of the submissions advanced by the parties, I remain of the view that Stennson ought to have an award of costs in its favour, and I remain of the view that an award of $8,815 is reasonable and appropriate in all the circumstances. It takes account of the mixed outcome on the review. It can be accepted that, following the delivery of judgment on 15 May 2025, Stennson was required to incur further expenditure from a cost consultant to calculate the adjustments to be made to the bill of costs in each proceeding, and also incurred additional professional costs and counsel fees. As those further costs resulted from the applicants’ successful ground of objection, I consider that the costs should be borne by Stennson.

45    For the reasons previously stated, it is unnecessary to apportion the lump sum award between the principal proceeding and the appeal proceeding. A single order will therefore be made in the principal proceeding.

Associate:

Dated:    16 July 2025