Re Ludlam [2019] HCATrans 126 (19 June 2019)

Last Updated: 20 June 2019

[2019] HCATrans 126

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Canberra No C12 of 2017

In the matter of -

questions referred to the Court of Disputed Returns pursuant to section 376 of the Commonwealth Electoral Act 1918 (Cth) concerning Mr Scott Ludlam

NETTLE J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 19 JUNE 2019, AT 9.40 AM

Copyright in the High Court of Australia
HIS HONOUR: For the reasons which I direct be incorporated into the transcript, I dismiss the Commonwealth’s application for review of the taxation of costs with costs.

This is an application pursuant to r 57.05 of the High Court Rules 2004 (Cth) (“the Rules”) to review a taxation of costs.

The facts

In brief substance the facts of the matter are as follows. On 24 August 2017, Kiefel CJ ordered that the Commonwealth pay Mr Ludlam’s costs of the proceeding on a partyparty basis.

On 19 April 2018, Mr Ludlam filed a bill of costs, indorsed with a request pursuant to r 57.01.1 that an estimate be made of the amount of costs and disbursements that would be allowed if the bill were taxed. In May 2018, the Taxing Officer advised the parties that it was estimated that Mr Ludlam’s costs and disbursements would be allowed in the sum of $168,082.85.

On 8 June 2018, the Commonwealth filed a Notice of Objection, pursuant to r 57.02.1. A taxation was held on 10 July 2018. Not all of the objections were resolved at the taxation, and the parties thereafter filed written submissions regarding the items which were still in dispute.

By letter dated 25 September 2018, the Taxing Officer advised the parties that, following the taxation, Mr Ludlam’s costs and disbursements were allowed in the sum of $148, 274.45 and that the costs of and incidental to the taxation were to be paid by the Commonwealth in an amount to be assessed.

Thereafter, the Taxing Officer was informed that, on 6 July 2018, the Commonwealth had made to Mr Ludlam an offer of “$155,000 in full and final settlement of all costs of your client in these proceedings, including the costs of and incidental to the taxation”, which the Commonwealth contended complied with r 58.04; with the result, in the Commonwealth’s submission, that, because the amount of the offer exceeded the amount allowed on taxation, no costs may be allowed to Mr Ludlam for any step in the taxation after 6 July 2018 and the Taxing Officer may order Mr Ludlam or the solicitor who prepared the bill to pay some or all of the Commonwealth’s costs of or incidental to the taxation.

The parties then filed further submissions regarding the effect of the offer. The Commonwealth contended that the offer was validly made in accordance with r 58.04; was in an amount greater than the total corresponding amount to be certified; and, therefore, that it attracted the operation of r 58.04 to the effect that no costs should be allowed to Mr Ludlam for any step in the taxation taken after 6 July 2018, and that Mr Ludlam or the solicitor who prepared the bill should be ordered to pay some or all of the costs of or incidental to the taxation which were incurred by the Commonwealth. Alternatively, the Commonwealth contended that, if the offer did not comply with r 58.04, the Taxing Officer had an overriding discretion to allow costs incurred by the Commonwealth after the offer was made, consistently with the objective of r 58.04 and Calderbank^[1] principles.

Mr Ludlam contended to the contrary that the offer was incapable of affecting the assessment of costs because: (i) it did not comply with r 58.04 in that it was expressed to be inclusive of costs; (ii) it was invalid for uncertainty; and (iii) consequently, it was not reasonably capable of acceptance.

By letter dated 11 February 2019, the Taxing Officer advised the parties that, after considering their submissions, she had assessed the “costs of and incidental to the taxation” up to and including 6 July 2018 in the sum of $6,324.10, and that, when that sum was deducted from the offer of $155,000, the effective amount of the offer was $148,765.90. That amount was more than the total amount allowed for costs and disbursements at the taxation ($148,274.45), and, therefore, prima facie, the Commonwealth’s offer satisfied the requirements of r 58.04. But, in the view of the Taxing Officer, in order to comply with r 58.04 an offer had to be made for a specific amount plus the costs of and incidental to the taxation and, because the Commonwealth’s offer was for a sum inclusive of the costs of taxation, it did not comply with r 58.04^[2]. Further, with regard to the Commonwealth's alternative contention, the Taxing Officer stated that, although she accepted there was no definitive rule that Calderbank offers that are “inclusive of costs” are invalid or unenforceable, and that the basis of the offer is a matter that may be taken into account in the exercise of discretion as relevant to the issue of reasonableness of the offeree’s refusal to accept such an offer^[3] the Taxing Officer was not prepared to exercise her discretion in favour of the Commonwealth, because: (i) the total amount certified was only slightly less than the amount of the offer; (ii) the offer was open for acceptance only for a short time, thus giving Mr Ludlam little time to assess the costs of and incidental to the taxation; and (iii) the fact that the offer was “inclusive of costs” made it difficult for Mr Ludlam to assess the precise value of the offer and compare it to the amount that he was likely to recover on the taxation, leading to the conclusion that it was not unreasonable for Mr Ludlam to reject the offer. Consequently, the Taxing Officer advised, she maintained the conclusion stated in her letter of 25 September 2018 that the Commonwealth must pay the costs of and incidental to the taxation and the taxing fee.

On 2 April 2019, the Taxing Officer issued a Certificate of Taxation that the costs of Mr Ludlam as against the Commonwealth had been taxed and allowed at $171,670.14, which included Mr Ludlam’s costs of and incidental to the taxation after 6 July 2018 (being those costs comprised in items 35 to 131 inclusive in Mr Ludlam’s addendum bill of costs delivered to the Taxing Officer on 27 November 2018, as supplemented by emails on 16 and 18 January 2019).

Relevant provisions of the Rules

Rule 57.01.1 provides in substance that a party filing a bill of costs for taxation may request the Taxing Officer to make an estimate of the approximate amount of professional charges and disbursements that would be allowed if the bill of costs were taxed.

Rule 57.01.6 provides in substance that if the party filing the bill of costs or other interested party disputes the estimate, the matter will proceed to taxation.

Rule 57.03.1 provides in substance that if any party is dissatisfied with the allowance or disallowance by the Taxing Officer in a bill of costs of the whole or a part of any item that party may apply to the Taxing Officer, before the Taxing Officer’s certificate is signed, for reconsideration of that item or part of the item.

Rule 57.03.4 provides in substance that, in that event, the Taxing Officer shall reconsider and review the taxation in relation to the objection and r 57.03.5 states in substance that the Taxing Officer shall state in the certificate of taxation by reference to the objection the grounds and reasons of decision on the objection and any special fact or circumstance relating to that decision.

Rule 57.03.6 states that:

“The Taxing Officer may tax the costs of the objections and add them to or deduct them from any sum payable by or to a party to the taxation.”

Rule 57.04.1 provides that:

“At the conclusion of each taxation of costs:

(a) the Taxing Officer shall state the total amount allowed on the taxation;

(b) the taxing fee shall be due and payable.”

Rule 57.04.2 provides in substance that, unless the parties otherwise agree, the Taxing Officer shall not sign a certificate of taxation until not less than 14 days after the completion of the taxation.

Rule 58.01 provides that the Taxing Officer shall fix the costs of preparing and taxing a bill of costs.

Rule 58.04 provides that:

“If, before the Taxing Officer certifies the total amount of costs allowed on a taxation of costs, the party liable to pay those costs offers in writing to pay a stated amount for the costs of the party entitled to the costs, and if the total amount certified is less than the amount offered:

(a) no costs shall be allowed to the party entitled to the costs for any step in the taxation taken after the date on which the offer was made; and

(b) the Taxing Officer may order the party entitled to the costs or the solicitor who prepared the bill to pay some or all of the costs of or incidental to the taxation which were incurred by the party liable to pay the costs.”

Rule 57.05.1 provides in substance that if any party is dissatisfied with the certificate of the Taxing Officer as to any item or part of an item reconsidered by the Taxing Officer under r 57.03.2, that party may, within 14 days from the date of the certificate, apply to a Justice of the Court for an order to review the taxation as to that item or part of an item.

The Commonwealth’s contentions

Before this Court, the Commonwealth put its application on the basis that the Taxing Officer erred in her construction of r 58.04, and thereby in allowing items 35 to 131 (inclusive) in Mr Ludlam’s addendum bill of costs in the Certificate of Taxation. Counsel for the Commonwealth submitted that an offer to pay “$155,000 in full and final settlement of all costs [of Mr Ludlam] in these proceedings, including the costs of and incidental to the taxation” comfortably falls within the natural and ordinary meaning of the expression “stated amount for the costs of the party entitled to the costs”; and, therefore, that the Commonwealth’s offer satisfied the requirements of the rule.

The Cost Applicant’s contentions

Mr Ludlam contended to the contrary that, if the Commonwealth’s offer were for a “stated amount” within the meaning of r 58.04, the stated amount was only $155,000, which was considerably less than the “total amount certified” of $171,670.14, and, therefore, that the rule was not engaged.

In the alternative, Mr Ludlam contended that the Commonwealth’s offer was not for a “stated amount” within the meaning of the rule, because it included the costs of the taxation; and, when the offer was made, the taxation was still to be conducted so that the costs of the taxation were, as then, unknown and unascertainable.

Counsel for Mr Ludlam called in aid the decision of Layton J in Flinders Diamonds Ltd v Tiger International Resources Inc & Ors (No 2)^[4] that an offer purportedly made under r 41.01 of the Supreme Court Rules 1987 (SA) of $100,000 “plus interest at the Supreme Court rate from the plaintiff's tax costs being agreed in addition to costs of this application to be agreed or taxed” was not an offer for a stated amount, and the observation of Robertson DCJ in Simmons v Williams (No.2)^[5], in relation to r 41.01 of the District Court Rules 1992 (SA), which in some respects is similar to r 58.04 of the Rules, that it is fundamental to the operation of the rule that there is an identifiable amount in the offer which the defendant is able to accept.

The effect of r 58.04 of the Rules

The criterion of operation of r 58.04 is that an offer be one to pay a “stated amount for the costs of the party entitled to the costs”, and the rule is engaged where the “total amount certified” is less than the “amount offered”, which is the stated amount. Here, the Commonwealth’s offer was for a “stated amount”, namely, $155,000 for the costs of the party entitled to costs including the costs of the taxation, but the total amount certified for the costs of the party entitled to costs including the costs of the taxation was $171,670.14. Why should it be supposed that r 58.04 was engaged?

As the Commonwealth would have it, in order to decide whether the total amount certified is less than the stated amount offered, it is necessary to subtract the costs of taxation incurred after the date of the offer of 6 July 2018 from the total amount certified. But as the Taxing Officer held, that contention must be rejected. It is not what r 58.04 provides.

The natural and ordinary meaning of the text of r 58.04 is that it requires comparison of the “stated amount” with the “total amount certified”, not with the total amount certified less some part of the costs of the taxation. There may be some potential for confusion arising from the use of several different expressions to describe the same thing. For example, r 57.04.1 requires the Taxing Officer to state “the total amount allowed on the taxation”. By contrast, the chapeau to r 58.04 refers to “the total amount of costs allowed on a taxation of costs”, and then, in the next line, refers to “the total amount certified”. Standing alone, the expression “the total amount of costs allowed on a taxation of costs” might perhaps be taken to mean the “professional charges and disbursements” mentioned in r 57.01.1, in contrast to the expression “the total amount certified”, signifying that amount plus the costs of taxation. But read as a whole, it is clear what is intended. Rule 58.04 requires an offer to pay a stated amount for the costs of the party entitled to the costs the subject of taxation, and, axiomatically, the costs of the party entitled to costs include that party’s costs of the taxation.

That meaning is confirmed by the purpose and context of the provision. Plainly, the purpose of the provision is to facilitate the making of offers, before taxations have been completed, which, if accepted, will bring taxations to an end before they are completed, and, therefore, before further costs of taxation are incurred. Consistently with that purpose, an offeror must offer an amount sufficient to cover not only a fair estimate of the professional costs the subject of taxation but also the costs of the taxation.

As to context, as has been seen, after a Taxing Officer has determined the amount which will be allowed on taxation, the Taxing Officer is required by r 57.04.1 to “state” the total amount which will be allowed on the taxation and then, under r 57.04.2, to wait not less than 14 days before signing the Certificate of Taxation. When the Taxing Officer makes the statement mandated by r 57.04.1, the Taxing Officer will necessarily be unaware of any offer that may have been made pursuant to r 58.04. Accordingly, in the ordinary course of events, it is to be expected that the Taxing Officer will include in the statement the costs of preparing and taxing the bill of costs. Thereafter, the parties have 14 days before the Certificate of Taxation is signed, and so, within that period of 14 days, the opportunity to bring to the Taxing Officer’s attention any offer that may have been made under r 58.04. At that point, it is to be expected that the Taxing Officer will give effect to r 58.04 by determining whether the total amount stated under r 57.04.1 is less than the stated amount offered under r 58.04, and then making any adjustment to the costs of taxation required by r 58.04(a) and any orders under r 58.04(b) that the Taxing Officer determines to be appropriate in the exercise of her or his discretion. Those adjustments having been made, the Taxing Officer will sign the Certificate of Taxation. The whole scheme thus makes sense only if the stated amount offered for the costs of the party entitled to the costs the subject of taxation includes the costs of the taxation.

Stated amount

For the purposes of r 58.04, an offer of “a stated amount” may be comprised either of an offer of a specified number of dollars for the offeree’s costs “including the costs of taxation” or of an offer of a specified number of dollars for the offeree’s costs “plus the costs of taxation”. Either satisfies the description of a “stated amount”, although each will have different consequences as is demonstrated by the facts of this case.

The Commonwealth’s offer of $155,000 for Mr Ludlam’s costs “including [Mr Ludlam’s] costs of the taxation” was an offer to pay a stated amount within the meaning of r 58.04. Nevertheless, because the stated amount was less than the total amount certified, the offer did not engage the operation of the rule. In order to engage the rule, the Commonwealth would need to have offered a stated amount of more than $171,670.14.

There were two ways in which it would have been open to the Commonwealth to do that. The Commonwealth could have offered a sum of more than $171,670.14 for the costs of Mr Ludlam “including the costs of and incidental to the taxation”, or, alternatively, and perhaps more advantageously from the Commonwealth’s point of view, the Commonwealth could have offered a sum of a dollar figure slightly in excess of $148,274.45, say, $149,000, “plus Mr Ludlam’s costs of and incidental to the taxation”. As explained, either form of offer would have been an offer to pay a “stated amount” within the meaning of r 58.04. But the latter form of offer may have been more advantageous from the Commonwealth’s point of view because it would have obviated the need to make an accurate estimate of Mr Ludlam’s costs of the taxation. Since neither of those courses was adopted, however, the Commonwealth’s offer was inadequate.

Conclusion and orders

The Taxing Officer was right to reject the Commonwealth’s claim that r 58.04 was engaged. The Commonwealth’s application for review of the taxation is dismissed, with costs.

Adjourn the Court.

AT 9.41 AM THE MATTER WAS CONCLUDED

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^[1] Calderbank v Calderbank [1976] Fam 93.

^[2] See and compare Associated Confectionery (Aust) Ltd v Mineral and Chemical Traders Pty Ltd (1991) 25 NSWLR 349; Smallacombe v Lockyer Investment Co Pty Ltd (1993) 42 FCR 97; Cox v Crooks (No 2) [2000] TASSC 34; Mid-City Skin Cancer and Laser Centre Pty Ltd v Zahedi-Anarak & Ors [2006] NSWSC 684; Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322

^[3] See Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322.

^[4] [2006] SASC 180.

^[5] [2003] SADC 131.