Costs – Law

Indemnity costs against Minister for Immigration

In SZMJQ v Minister for Immigration (No.2) [2009] FMCA 1137 Raphael FM suggested that public law proceedings might not be amenable to Calderbank offers, but did not decide the point.

In SZPAD v Minister for Immigration [2012] FMCA 73, Smith FM did not explicitly decide the point but at [51]-[53] left open the possibility that indemnity costs might be awarded because of an unreasonable failure to accept an offer of compromise.

Neither SZMJQ nor SZPAD (insofar as it concerns this issue) appear to have been subsequently considered.

What is clear from SZMJQ at least is that any Calderbank offer must at least identify the ground upon which any offer to consent to remittal is to be based. Without this (for example, general reference to an application with multiple grounds), the Calderbank offer is uncertain and therefore cannot found a basis for indemnity costs.

Different methodologies for assessing costs

Gross sum costs can be awarded as an alternative to costly and protracted costs on taxation.

There are different methodologies that can be used to calculate gross sum costs. Some were summarised in Wieland v Texxcon Pty Ltd [2016] VSCA 45:

Methodology Options in a Gross Sum Exercise

… In my view there is no one option in terms of methodology in a gross sum exercise. It will depend on the basis for costs recovery ordered in favour of the recovering party.

As discussed in Pegela,[17] there are several options available in relation to methodology. One option is the ‘analogy’ method to ‘review previous gross sum cases to identify what the percentage reduction on costs was in those cases and adopt an appropriate reduction by reference to previous practice’. This is not an attractive option having regard to the wide range of percentages of recovery across a number of example cases referred to by Sackville J in the Seven Network Limited v New Limited.[18]

A second option has been referred to as the ‘adjusted fees’ methodology. This is a possible option where costs are recoverable on scale. It involves taking the base hours from time records and multiplying them by the scale rate, adjusting it to account for the different scale rates applicable for particular types of work and then applying a loading for general care. This is closest to the one proposed by the applicants and said in argument to Beach JA in this matter to be the only option.[19]

A third option is the ‘Ausmaq’ method. This can be favoured where costs are to be assessed on hourly rates. This involves actual costs incurred, identifying work that falls outside the scope of the costs order, and then breaking the figure down to costs and disbursements. As a next step appropriate hourly rates are determined and then a final calculation is made on the basis of the hourly rate options, the cost reduction for unreasonable work and the addition of disbursements.

Other methodologies have been referred to in case law.[20]

Costs in pro bono matters

In Wentworth v Rogers [2002] NSWSC 709 the Supreme Court of NSW discussed the meaning of ‘pro bono’ and whether a conditional costs agreement can be understood as ‘pro bono’, or otherwise offending the indemnity principle.

At [70]-[77] Barrett J discussed the various understandings of the term ‘pro bono’ and specifically noted that pro bono does not exclude conditional costs.

In Wentworth v Rogers [2006] NSWCA 145 the NSW Court of Appeal discussed whether a conditional costs agreement (still ‘pro bono’) offended the indemnity principle. The Court had to consider whether costs could be awarded when the winning party had a costs agreement under which costs were contingent on a successful outcome.

Santow JA discussed the issues at [37]-[66] and concluded that such an agreement would not. Basten JA expressed the opposite view, while Hislop J did not express any view.

In Mainieri v Cirillo [2014] VSCA 227, [43]-[53] the Victorian Court of Appeal unanimously preferred Santow JA’s analysis and dismissed the (ground of) appeal against an order that costs be paid to the winning party who had a pro bono conditional costs agreement.

Costs Court

See http://www.the-civil-lawyer.net/2013/03/new-costs-regime-for-victoria-supreme.html for a good explanation of the ‘standard’ and ‘indemnity’ bases on which costs may be awarded.

If there is an award of party/party costs, it is more than likely that it will be on the ‘standard’ basis (ie all costs reasonably incurred), rather than the old ‘costs incurred on a necessary and proper’ basis.