Costs Practice Note (GPN-COSTS)
General Practice Note
1.1 This practice note applies to all proceedings in the Federal Court (noting however paragraph 2.2 below). It:
(a) is to be read together with:
- the Central Practice Note (CPN-1) which sets out the fundamental principles concerning the National Court Framework of the Federal Court and key principles of case management procedure;
- the provisions relating to costs set out in the Federal Court of Australia Act 1976 (Cth) ("Federal Court Act") and the Federal Court Rules 2011 (Cth) ("Federal Court Rules"); and
- the further information listed in Part 9 of this practice note;
(b) takes effect from the date it is issued and, to the extent practicable, applies to proceedings whether filed before, or after, the date of issuing;
(c) is not intended to be inflexibly applied.
2. Overview and Definitions
2.1 When considering costs-related issues, parties and their lawyers should familiarise themselves with:
(a) sections 37M and 37N of the Federal Court Act dealing with the overarching purpose of civil practice and procedure in the Court and special costs orders against parties or their lawyers for failure to comply with the overarching purpose (see also r 40.07 of the Federal Court Rules);
(b) section 43 of the Federal Court Act relating to costs generally;
(c) Part 40 of the Federal Court Rules, including the rules relating to:
- party and party costs (r 40.01; see also the Dictionary, which defines party and party costs as costs "fairly and reasonably incurred");
- lump-sum and other costs orders, including indemnity costs (r 40.02; see also the Dictionary which defines costs "on an indemnity basis");
- what happens when no order for costs is made at a hearing (r 40.04);
- the timing of any taxation in the context of an interlocutory application (r 40.13);
- an estimate of a long form bill (r 40.20);
(d) the Central Practice Note, including Part 7 (Overarching Purpose) and Part 17 (Costs); and
(e) the further material listed in Part 7 of this practice note.
2.2 In proceedings within certain areas of law, specific statutory or other legal considerations may apply in respect of costs (see for example s 43 of the Federal Court Act). Such areas of law include:
(a) Class Actions – see for example ss 43(1A), 33ZJ, 33V(2) and 33ZF of the Federal Court Act;
(b) Fair Work matters - see for example s 570 of the Fair Work Act 2009 (Cth);
(c) Native Title matters - see for example s 85A of the Native Title Act 1993 (Cth).
Such requirements may, to a degree, render parts of this practice note less applicable in certain proceedings. However, this practice note should, to the extent that it may be relevant and of utility to do so, be applied as far as practicable to the costs issues in such proceedings.
2.3 In this practice note:
|Costs Applicant||means a party (or non-party) in whose favour a costs order has been made or who seeks such an order in their favour;|
|Costs Respondent||means a party (or non-party) liable or potentially liable to pay costs.|
3. Costs Principles and Case Management
3.1 The Court recognises that the procedure for determining the quantum of costs for a party successful at a final hearing should not be delayed and should be as inexpensive and efficient as possible.
3.2 To this end the Court expects parties to make a genuine effort, wherever it is practicable to do so, to negotiate with a view to resolving costs issues between them at the earliest opportunity. Parties are also encouraged, where appropriate, to utilise formal "offers to compromise" (see Part 25 of the Federal Court Rules, including r 25.14) or otherwise make offers to settle costs disputes.
3.3 For those costs issues that are unable to be resolved by negotiation and require the involvement of the Court, the Court's preference is to avoid, where possible, the making of costs orders that lead to potentially expensive and lengthy taxation of costs hearings. Rather, the Court will seek to adopt, and will encourage parties to utilise, the appropriate use of sophisticated costs orders and procedures, including lump-sum costs orders, consolidated costs orders, estimate of costs processes and Alternative Dispute Resolution ("ADR"). Taxation of costs hearings should be the exception and be confined to those matters that have genuinely been unable to be otherwise resolved or determined.
Early Determination of Costs
3.4 The early determination of costs involves the determination of who is entitled to be paid the costs of a proceeding and on what basis – eg. on a "party and party" or "indemnity" basis ("costs entitlement question"). The costs entitlement question may be determined in the judgment or order following the trial as to liability and/or quantum or penalties ("judgment") or will otherwise be determined at the earliest practicable and appropriate time following judgment.
3.5 The early determination of costs also involves the determination of the quantum of the costs to be paid ("quantum of costs question"). The quantum of costs question will usually be determined through one of the following procedures:
(a) in appropriate cases, by the judge, through a lump-sum costs procedure within approximately 6 weeks after determination of the costs entitlement question (see Part 4 below); or
Use of Consolidated Costs Orders
3.6 In some proceedings a mix of potential costs entitlements may arise. This can be the case when, for example, interlocutory costs orders and final costs orders favour opposing parties, where parties succeed in only a small or partial component of their claims, or where both claims and cross-claims are wholly or partially successful. Historically, this would often lead to the burden of multiple or apportioned costs orders, multiple bills of costs and multi-layered taxation processes in the one proceeding.
3.7 In these or other similar circumstances, the Court will, if it considers it appropriate to do so, make a consolidated costs order which has the effect of consolidating multiple or competing costs entitlements and future costs processes. This process may involve offsetting one party's costs entitlement against another party's costs entitlement and awarding the balance in one global costs order on a percentage basis, or making no order as to costs in respect of one or more costs entitlements. Wherever possible, the aim is to consolidate multiple or competing costs entitlements into one consolidated costs order to simplify any future costs process. Such consolidated costs orders may also be awarded as lump-sum costs orders where appropriate.
3.8 Whether or not a consolidated costs order is appropriate in a particular case will always be at the discretion of the judge. The parties will have a fair opportunity to present their views as to the appropriateness of any such order being made.
3.9 No formal application for a consolidated costs order is required. However, a party requesting such an order should, wherever it is practicable to do so, give notice in writing (including a brief explanation as to the basis for the request) to the Court and to all other parties in advance of any hearing at which the request will be made.
"Costs Capping" Orders in Particular Proceedings
3.10 Parties may suggest to the Court, and the Court may otherwise consider, the appropriateness of tailored costs orders arising from the particular character of the case. For instance, the Central Practice Note (see paragraph 8.5(l)) encourages parties to consider, as part of the Case Management Imperatives, whether the capping of the amount of costs to be recoverable may be relevant and appropriate in any particular case.
3.11 The Court will consider the consequences of making such an order from the perspective of all parties in the proceeding. Relevant matters that may be taken into consideration include: the timing of the application, the complexity of the factual or legal issues raised, the quantum of damages claimed and the nature of the remedies sought, the impact on the parties of making such an order, whether there is a public interest element to the case, the proportionality of the costs being incurred and the substance of the case.
Allocations of Costs Events
3.12 When allocating costs events to a registrar (such as making an estimate of a bill of costs, conducting mediations, confidential conferences and taxations of costs) a registrar will be allocated to conduct such events based on the Court's view of the most just, effective and efficient basis for doing so. For example, if considered appropriate in a particular case, it may be that a taxation of costs is conducted by the same registrar who conducted the estimate of the bill of costs.
General Costs Principles
3.13 The purpose of a costs order is to compensate a successful party rather than punish an unsuccessful party. However, the Court will consider the appropriateness of the making of a special costs order in circumstances which may warrant it, including where parties have failed to comply with their pre-litigation "genuine steps" obligations, where the "overarching purpose" duty has not been met, where parties engage in an abuse of process, raise unmeritorious arguments before the Court or otherwise conduct themselves inappropriately in the litigation.
3.14 A party should never embark on a costs-related process within this Court as a strategic device to gain advantage in the litigation, such as to delay the litigation process.
3.15 Parties should be realistic in their claims for costs and not seek to misuse or misapply the Federal Court Scale of Costs ("Scale"). It is inappropriate to make a claim which contains unrealistic, unmeritorious or ambit claims.
3.16 Equally, a party should never seek to obtain a windfall from any costs process. A fundamental principle of the law relating to costs is that the amount of costs recovered by a party in whose favour the costs order is made must not exceed the amount of costs for which the Costs Applicant is liable (otherwise generally known as the "indemnity principle"). To this end, a lawyer or costs consultant (with a practicing certificate) must verify, among other things, the accuracy of the claim for costs and compliance with the indemnity principle. If the Costs Applicant is unrepresented, the Costs Applicant must make the verification (contained in the example bill of costs (PDF, 90 KB) on the Court's website).
3.17 Subject to any special costs-related order that may be made by the Court (such as one involving costs arising from multiple related proceedings), parties should not make claims for costs that are unconnected or tenuously connected to the subject matter and conduct of the litigation or the ambit of the costs order.
4. Costs Obtained via a Lump-sum Costs Order
4.1 The Court's preference, wherever it is practicable and appropriate to do so, is for the making of a lump-sum costs order .
4.2 Utilisation of a lump-sum costs procedure will always be at the discretion of the judge. The parties will be given a fair opportunity to present their views as to the appropriateness of utilising a lump-sum costs procedure.
Timing of Lump-Sum Costs Procedure
4.3 Unless the Court has previously determined the quantum of costs question (such as in the judgment on liability) or costs issues have otherwise been resolved in advance by the parties, then for those cases for which a lump-sum procedure is appropriate, the parties should expect to address the Court in relation to the making of a lump-sum costs order as noted below.
"Regular" costs scenario
4.4 In regular, lengthy and complex cases or where more complex costs issues arise, the costs hearing dealing with lump-sum costs will take place within 6 weeks following the determination of the costs entitlement question, or as soon as possible at any other time considered appropriate by the judge. More complex costs issues include situations where indemnity costs, consolidated costs, Offers to compromise or similar offers may apply.
4.5 At the time of listing the costs hearing, or soon after, the judge will timetable the filing of relevant costs material.
"Simple" costs scenario
4.6 In particularly short and simple cases and where straight forward costs orders are sought (ie. on a simple party and party basis), the costs hearing dealing with lump-sum costs will take place during closing submissions at trial or as soon as possible thereafter.
4.7 In such a scenario, it may be appropriate for the lump-sum costs matters to be addressed before or immediately following the determination of the costs entitlement question. However, given that this procedure may involve the parties preparing for costs matters in advance of trial, such a process is one that lends itself to the most straightforward of cases and therefore while the Court encourages parties to utilise it, parties should not consider themselves compelled to utilise it (unless the judge has previously directed that they should).
4.8 Parties are encouraged to notify the Court and all other parties of their views on the appropriateness of utilising the lump-sum costs procedure, succinctly, at the earliest practicable stage in the proceeding including at the pre-trial case management hearing or at the trial stage.
4.9 The judge may involve a registrar in a number of capacities when dealing with a lump-sum costs procedure, including as a consultant on costs and to facilitate any ADR process. This may include:
(a) considering the relevant costs issues with a registrar before, during or after the costs hearing;
(b) having the registrar attend the costs hearing with the judge; and/or
(c) in appropriate cases, referring the costs dispute to mediation or to registrar as a referee.
Material in Support
4.10 Unless the Court otherwise directs, no formal application for a lump-sum costs order is required. However, in cases where a lump-sum costs procedure is to take place, the Costs Applicant should file an affidavit in support of the lump-sum claim ("Costs Summary") in accordance with the timetable set by the judge. The Costs Summary should succinctly address the relevant matters set out in Part B of "Annexure A - Guide for Preparing a Costs Summary" and must also verify the matters set out in Part A of Annexure A.
4.11 The Costs Summary must be clear, concise and direct and not resemble a bill of costs in taxable form, nor should it contain submissions on the law. The intention of the lump-sum costs procedure is to streamline and expedite the determination or resolution of the quantum of costs question and not to replicate the taxation process.
4.12 Unless leave is given by the Court in advance of filing, the Costs Summary must not exceed 5 pages in length (omitting formal parts) or, in large or complex cases, no more than 10 pages. The Costs Applicant is not required to exhibit to the Costs Summary the source material verifying the costs and disbursements claimed. However, such material must be available at the costs hearing.
Material in Response
4.13 The Costs Respondent may file an affidavit responding to the matters raised in the Costs Summary ("Costs Response") in accordance with the timetable set by the judge.
4.14 Any Costs Response must be clear, concise and direct and briefly summarise the categories of any disputes arising in respect of the Costs Summary. The summary should not resemble formal costs objections (as prepared for a taxation of costs) nor contain submissions on the law. The Costs Response should make clear which of the costs issues arising from the Costs Summary are in dispute and which are not, and should not exceed 4 pages in length (omitting formal parts) or, in large or complex cases, no more than 8 pages.
4.15 If the parties are given leave by the Court to do so, they may file short written submissions addressing the law as to costs on relevant issues in accordance with any timetable set by the Court. Unless leave is given by the Court in advance of filing, any submissions must not exceed 3 pages in length.
Proposed Orders for Costs Timetable
4.16 In a "regular costs scenario" (see paragraphs 4.4 to 4.5 above), unless the Court has already set the timetable, the parties are encouraged to discuss between them, at the earliest opportunity after the determination of the costs entitlement question, appropriate proposed orders addressing the timetable for the costs hearing and related matters.
4.17 Parties should file proposed orders, preferably by consent, as soon as possible before the costs timetable is to be addressed by the judge.
Co-operation, Consent and Matters Resolved
4.18 During the lump-sum costs procedure, including in advance of the costs hearing, the parties must at all times adopt a practical approach and co-operate with each other. This includes a costs party promptly responding to any sensible query raised by another costs party arising from the material filed during the procedure which, if clarified, may narrow the issues in dispute or which, if left unclarified, may make the lump-sum costs process less efficient.
4.19 Where a Costs Respondent does not wish to oppose a Costs Summary, the Costs Respondent should notify the Court, the Costs Applicant and any other party or interested person in writing as soon as possible so that the judge may consider whether the costs hearing should be vacated.
4.20 Where, at any stage of the lump-sum procedure, the Costs Applicant and Costs Respondent resolve the costs dispute by agreement, the parties to such an agreement should notify the Court as soon as possible in writing indicating that a resolution has been reached and provide proposed consent orders. The Court may make an order in accordance with the proposed consent orders or any other order considered appropriate, and may vacate the costs hearing.
Costs at the Conclusion of Hearings Before a Registrar
4.21 In corporations and bankruptcy proceedings listed before a registrar the Court will generally fix costs at the conclusion of the hearing based on a "Schedule of Costs" lodged via eLodgment in advance of the hearing or as may otherwise be permitted by the presiding registrar. A guide on such matters is available on the Court's website.
4.22 In order to finalise costs issues swiftly at the costs hearing, parties are encouraged, to utilise the procedures set out in the guide in Annexure A rather than to file a short or long form bill of costs after the conclusion of the hearing.
5. Costs Obtained Other than via a Lump-sum Costs Order
5.1 In circumstances where a lump-sum costs order has not been made, the procedures set out in Part 40 of the Federal Court Rules will usually apply (see in particular Divisions 40.2 and 40.3).
5.2 The Court will endeavour to deal with costs issues promptly upon the filing of a bill of costs and will regularly use mediation to resolve costs issues swiftly. If parties have not already commenced a negotiation process, parties are encouraged to negotiate without delay to resolve their differences on costs, rather than awaiting a response from a registrar or a more formal ADR process at a later time.
Short Form Bill of Costs
5.3 A short form bill of costs may be filed in respect of:
(b) appeals from a judgment of the Federal Circuit and Family Court of Australia (Division 2) relating to a migration decision (r 40.43 of the Federal Court Rules);
5.4 The purpose of a short form bill is to provide for a truncated and speedier bill of costs process which does not require a detailed itemised bill (as with long form bills). Fixed sums apply for costs which represent fair compensation for the costs incurred. One of the chief benefits of the short form bill process is the considerable saving of the time and cost associated with the long form bills process (which may involve an estimate, mediation and taxation hearing) and the Court encourages parties to utilise short form bills in permissible proceedings if no lump-sum order has been made.
5.5 The short form bill of costs may only seek:
(a) certain short form amounts allowed for professional costs set out in items 13, 14 or 15 of the Scale (as at the date that the relevant proceeding was commenced); and
(b) out-of-pocket disbursements that have been incurred (item 18 of the Scale).
Long Form Bill of Costs
5.7 Embarking on a long form bill of costs process may result in a lengthier and more costly process than the lump-sum process set out in this practice note.
5.8 Parties should be familiar with the key elements of the long form bill process, including the conducting of estimates (r 40.20 of the Federal Court Rules and following), the objections process (r 40.21 and following), confidential conferences (r 40.21(2) and following) and taxation hearings (r 40.27 and following).
5.9 A bill of costs should be in accordance with r 40.18 of the Federal Court Rules and the example bill of costs (PDF, 90 KB) on the Court's website. In addition, Costs Applicants and their representatives should carefully consider "Annexure B - Guide for Preparing a Bill of Costs".
Service of a Bill of Costs
5.10 A Costs Applicant must not only comply with the minimum service requirement in r 40.19 of the Federal Court Rules, but is also expected by the Court to serve the bill on each party interested in the bill at the earliest practicable time after it has been filed. The Costs Applicant should also promptly notify the registry in writing of having done so. Certain areas of law may have other specific statutory or legal requirements, for example, in some matters such as bankruptcy and corporations matters listed before a registrar, parties are required to file an affidavit of service of the bill of costs.
Estimate of Costs Process
5.11 When a long form bill of costs is filed it will be allocated to a registrar to make an estimate of the approximate total for which, if the bill were to be taxed, the certificate of taxation would be likely to issue. This process must take place before any taxation hearing can occur (r 40.20(1) of the Federal Court Rules).
5.12 The Court will inform the parties (via a formal endorsement under the Federal Court Rules or otherwise) of the anticipated date by which the registrar will conduct the estimate. The estimate will be made, wherever possible, within 30 – 60 days of the filing of the bill of costs, depending on the complexity of the bill. The Court will keep the parties to the bill informed of any change in timing for the estimate being made.
5.13 It is important to note that an estimate is not a taxation. An estimate is intended to be quite distinct from a taxation process and has a number of key features, including that:
(a) it is, by definition, an estimate only of the amount that "would be likely to issue" if the bill were taxed. Accordingly, unlike a taxation, it is not a precise item-by-item assessment or determination of the bill (r 40.20(2) of the Federal Court Rules);
(b) it is, however, an important and persuasive guide for the parties to assist them in assessing their respective risks as to embarking on a contested taxation process and may also assist the parties in any formal or informal ADR process;
(c) by default, if the notice of estimate is not objected to within 21 days, the amount of the estimate is the amount for which the certificate of taxation will be issued
(r 40.20(4) of the Federal Court Rules);
(d) it also gives rise to important considerations relating to liability for the costs of proceeding to a taxation hearing, particularly if the relevant threshold set out in r 40.33 of the Federal Court Rules is not bettered by the party objecting to the estimate (known as the "15% rule").
Estimates and Submissions
5.14 A further key feature of the estimate is that it is required to be made "in the absence of the parties" (r 40.20(2) of the Federal Court Rules). Accordingly, the registrar making the estimate will usually rely only on the bill and any key file documents (such as costs orders and relevant reasons for judgment). Submissions in support of the bill or in opposition to it will not be permitted during the estimate process and if they are received by the Court without notice will not be taken into consideration, unless they arise in the circumstances noted below.
5.15 In appropriate cases, it is customary for bills to contain some very brief commentary regarding any loading for "skill, care and responsibility" or with respect to exceptional circumstances (eg. clarifying how costs have been claimed as part of an issue-based costs order). The Court is willing to permit such clarifications only if they are essential for the proper understanding of the bill and are stated concisely. Any abuse of this exception may result in the Costs Applicant being required to redraft and re-file the bill.
5.16 Sometimes a serious defect of an objective nature is contained in the bill (eg. a major calculation error or reliance on the wrong costs order), as opposed to a subjectively-based disagreement about items claimed in the bill. Such defects impact on the amount correctly claimable and impair the estimate process. In such circumstances, (assuming the Costs Respondent has identified the defect), the Costs Respondent should immediately and concisely notify the Court, the Costs Applicant and any other parties to the bill in writing of the defect, and the parties should:
(a) co-operatively discuss how best to address the defect (eg. withdrawal and refiling of the bill or the filing of an amended bill by consent); and
(b) promptly and concisely notify the Court in writing of their agreed proposal (or separate proposals) to address the defect.
The registrar may or may not proceed in accordance with the proposal(s) of the parties.
5.17 Parties should expect that "provisional taxations" under r 40.23 of the Federal Court Rules will not be conducted other than in exceptional circumstances.
5.18 It is expected that, given the Court's approach to lump-sum costs orders, the guidance provided by the estimates process and the fact that ADR processes will be regularly applied, notices of objection and taxation hearings will be required infrequently.
5.19 A notice of objection to an estimate cannot proceed unless a party objecting files a Form 128 Notice of Objection within 21 days and pays the required security for costs into the Litigants' Fund (r 40.21(1)).
5.20 Any objection to an estimate will be dealt with under the Federal Court Rules, with a particular focus on a resolution of the costs dispute by way of a "confidential conference" (see r 40.21(2) of the Federal Court Rules). A confidential conference of a taxation dispute will ordinarily be conducted in the same manner as a mediation (but tailored to suit the nature of the costs dispute and the needs of the parties). Parties should therefore familiarise themselves with the guiding ADR principles set out in the Central Practice Note and further information regarding ADR processes on the Court's website.
5.21 At all times during any objection or taxation process, parties must take care to adhere to the overarching purpose and, wherever possible and appropriate, narrow the issues in dispute.
6. Goods And Services Tax (GST)
6.1 The principles concerning GST set out in this Part are relevant not only to long form bills of costs, but also to the other costs processes referred to in this practice note, including lump-sum costs and short form bills of costs (to the extent applicable).
GST and the Federal Court Scale of Costs
6.2 The Scale does not expressly refer to GST and, in the most part, simply constitutes a series of charges which reflect the maximum price for legal services under the Federal Court Rules capable of being recovered for the items, irrespective of the tax implications which may arise for any particular Costs Applicant.
6.3 Nevertheless, the Court recognises that, as a matter of practicality and given the nature of some of the items in the Scale, Cost Applicants may be influenced as to what amount to claim under such items by whether the GST appears to be applicable and whether they are able to claim an input tax credit. The Court understands the realities of how costs are usually incurred by litigants and seeks to adopt a practical and common sense approach to the GST issue. Equally, the Court seeks to ensure that Cost Applicants are treated as equitably as possible in respect of the GST, given that not all Cost Applicants are able to obtain an input tax credit.
6.4 Accordingly, the information below is designed to give parties greater guidance on how to address GST-related costs issues and to ensure a consistent and national approach to the treatment of GST and costs in this Court (see also the guidance contained in Annexures A and B and the example Bill of Costs (PDF, 90 KB).
6.5 With respect to including or excluding GST in a bill of costs, if the Costs Applicant is entitled to claim input tax credits (as, for example, many corporations are) then fairly and reasonably incurred costs and disbursements should be claimed in accordance with the Scale and exclusive of GST (ie no GST is added).
6.6 Alternatively, if the Costs Applicant is not entitled to claim input tax credits (as, for example, many individuals are not) then fairly and reasonably incurred costs and disbursements should be claimed as follows:
(a) disbursements should be claimed in the amount incurred inclusive of GST;
(b) costs should be claimed:
(i) inclusive of GST for: Scale items 1.1 and any other Scale item that expressly requires or permits the application of item 1.1, however in all circumstances the amount claimed must not exceed the cap listed in Item 1.1, inclusive or exclusive of GST or Scale Item 12; and
(ii) otherwise in accordance with the Scale (ie. no GST is added).
6.7 Within any Costs Summary or bill of costs, the Costs Applicant must make a GST disclosure clarifying whether the Costs Applicant is registered for GST purposes and entitled to claim an input tax credit ("GST Disclosure") (refer to the verification in Part A of Annexure A or the certificate in the example bill of costs (PDF, 90 KB) on the Court's website).
6.8 If a Costs Applicant fails to make a GST Disclosure or otherwise make clear their status for GST purposes, the Court will proceed with the estimate or other costs process on the basis that the Costs Applicant is entitled to claim the input tax credit and therefore any GST component of the costs or disbursements claimed will be excluded in accordance with paragraph 6.6 above.
7. Further Practice Information & Resources
7.1 When parties are required to provide written notification to the Court of a matter in accordance with this practice note, unless otherwise directed, they should lodge a brief letter with the registry (via eLodgment) appropriately addressed to the chambers staff of the relevant judge or registrar.
7.2 Specific information relevant to class actions and costs is available in the Class Actions Practice Note (GPN-CA).
7.3 A guide to assist Cost Applicants seeking costs at the conclusion of a hearing before a registrar in relation to corporations and bankruptcy proceedings is available on the Court's website.
7.4 General information to assist parties in relation to costs is available as follows:
(a) for the lump-sum costs process: the Guide for Preparing a Costs Summary in Annexure A;
(b) for preparing Bill of Costs: the Guide for Preparing a Bill of Costs in Annexure B;
(c) the example bill of costs (PDF, 90 KB) on the Court's website;
(d) the Federal Court's National Guide to Counsel Fees;
(e) the Federal Court's National Guide to Discretionary Items in Bills of Costs; and
(f) general costs information on the Court's website.
7.5 Further information to assist litigants, including a range of helpful guides, is also available on the Court's website. This information may be particularly helpful for litigants who are representing themselves.
J L B ALLSOP
25 October 2016
Guide for Preparing a Costs Summary
(Supporting a lump-sum costs order request)
This guide sets out how to prepare a Costs Summary in support of a request for a lump-sum costs order. For more information on lump-sum costs orders, refer to Part 4 of the Costs Practice Note (GPN-COSTS).
The Costs Summary should be in the form of an Affidavit (Form 59).
Part A - Verification
The deponent must verify the following in the Costs Summary, that:
1. the deponent has read the Federal Court Costs Practice Note; and
2. the Costs Applicant* [name of party with the benefit of the costs order] is [entitled/not entitled] to claim input tax credits in respect of any GST relevant to the claims in the Costs Summary and has complied with Part 6 of the Costs Practice Note; and
3. in the Costs Summary:
(a) the Costs Applicant is not claiming more than the Costs Applicant is liable to pay for costs and disbursements;
(b) the calculations made are correct;
(c) the matters noted are a fair and accurate summary of the costs and disbursements that the Costs Applicant is entitled to claim; and
4. the amounts claimed are capable of further verification through source material (such as file records, tax invoices and receipts for payment) should such material be required by the Court to be produced.
Part B – Content
1. When preparing a Costs Summary the deponent should succinctly set out the following information (to the extent relevant) in the Costs Summary:
(a) clarify in the costs summary whether it has been prepared with the assistance of an expert as to costs (eg. costs consultant);
(b) who is liable, according to the Costs Applicant, to pay the costs claimed in the Costs Summary (including any non-party if applicable) and on what basis (eg. as between "party and party" or on an indemnity basis).
(c) any relevant costs orders or rules relied on in support of the costs claim should be referred to in the Costs Summary;
(d) the amount of the lump-sum sought;
(e) how the lump-sum has been calculated (including any GST portion) and if any discounts have been applied;
(f) a summary of the categories of the work fairly and reasonably incurred in the conduct of the litigation, including, an estimate (in percentage terms) of the proportion that each category of work constitutes of the total costs claimed (eg. discovery 15%);
(g) in respect of each person who has performed costs work the subject of the claim:
i) a summary of each person's hourly rate and total hours worked; and
ii) an estimate (in percentage terms) of the proportion of the total sum claimed attributable to that person (eg. Penny White 5%);
(h) a summary (with any applicable hourly and/or daily rates) of disbursements fairly and reasonably incurred in the conduct of the litigation, including fees charged by counsel and any expert witness. Further, in respect of counsel, an estimate (in percentage terms) of the proportion of the total sum claimed attributable to counsel fees (collectively);
(i) a clarification of the amount of any "skill, care and responsibility" claimed and how it has been calculated (including any percentage applied) and the bases for it being claimed;
(j) where applicable, a description of any special or unusual costs arrangements underpinning the costs claimed (eg. conditional fee agreements pro-bono arrangements fixed fee arrangements per Scale item 12 etc);
(k) whether the amounts claimed relevantly fall within or outside the following:
i) the amounts permissible for any item under the Scale;
ii) the Federal Court's National Guide to Counsel's Fees;
iii) the Federal Court's National Guide to Discretionary Items Bills of Costs; and
(l) any special features of the case which may impact the assessment of costs or any other relevant and important matters not mentioned above.
Guide for Preparing a Bill of Costs
This guide is prepared to assist the Costs Applicant in preparing the bill of costs. It is in the Costs Applicant's interests to follow this guide to assist the taxing officer to make an estimate.
Before preparing a bill of costs (bill), ensure that you are familiar with the:
- Federal Court's Scale of Costs;
- Costs Practice Note and its attachments and the example bill of costs (PDF, 90 KB) on the website;
- Federal Court's National Guide to Discretionary Items in Bills of Costs;
- Federal Court's National Guide to Counsel Fees.
When preparing the bill, keep in mind at all times that a Costs Applicant:
- must claim costs referencing the most directly relevant item in the Scale and not attempt to "shoehorn" that claim into a Scale item that is less relevant or less suitable for that claim;
- should never seek to claim compensation more than once for any one legal task sought to be claimed, even if that work could be claimed under more than one item in the Scale.
Part A - Certificate
1. Complete the certificate (amend the wording of the certificate as needed to adjust for more than one Costs Applicant). The GST Disclosure in paragraph 2 of the certificate must be consistent with the treatment of GST throughout the bill;
2. The certificate must be signed by the lawyer or costs consultant who prepared the bill, noting however, that if the costs consultant does not hold a practicing certificate, then it must be signed by the lawyer who files the bill. If the Costs Applicant is unrepresented, it must be signed by the Costs Applicant. The certificate is an important representation made to the Court and other parties – ensure that it is correct.
NOTE: if a bill is filed with an unsigned certificate, then the taxing officer will require an appropriately signed bill be provided before they process it.
Part B - Tables of Rates
1. Complete each table of rates for lawyers and counsel and make clear whether GST is included or excluded in the rates noted.
2. When completing the "Years of Experience of lawyer and counsel" column, based on the actual number of years practicing, insert "less than 3 years", "3-6 years" or "more than 10 years".
3. When completing the hourly rates columns, where during the course of the proceeding any hourly rates have changed, set out the rate or rates that apply to each lawyer and/or counsel relevant to the bill of costs on separate rows, and the period or periods in respect of which the rate or rates apply.
|Name of lawyer||Position / title||Years of experience||Hourly Rate |
Excluding GST $
|Hourly Rate Including GST $|
|Penny White [PW]||Partner||More than 10 years||(1 Jul 14 – 30 Jun 15) 600.00||660.00|
|Penny White [PW]||Partner||More than 10 years||(1 Jul 15 – 30 Jun 16) 650.00||715.00|
Part C – Special Notes
1. As required and as succinctly as possible, complete the Orders / Rules, relevant claim period, exceptional circumstances and loading (see paragraphs 5.14 and 5.15 of the Costs Practice Note).
NOTE: any special comments relating to the bill should not be included in the table of claim for costs.
NOTE: any prolix special notes may be ignored or rejected by the Court.
Parts D and E – Tables of Claims for Costs and Disbursements
1. List costs and disbursements in separate tables
(a) In the first table, insert costs claimed for work done by lawyers, law graduates, paralegal staff etc;
(b) In the second table, insert for disbursements incurred.
2. Insert details in the costs and disbursements tables
(a) In chronological order, insert the claim number, date, Scale item and description of [work done / disbursement incurred] and the amount claimed (editing the table to appropriately select "inclusive" or "exclusive" of GST);
(b) In the costs table:
(i) Ensure that for each of the particulars of work done the relevant Scale item is referenced and, where applicable, the initials of the lawyer who undertook the work. Also, ensure that, as applicable, the relevant time taken or category of word-count is noted (eg "1.5 hrs" or "< 50 words");
(ii) Describe the work done succinctly, but in sufficient detail to enable the taxing officer to determine if the costs were fairly and reasonably incurred (eg. rather than "attend conference", use "conference with counsel re discovery and inspection");
(iii) Do not group distinct categories of work into one bill item (eg. call to client, conference with counsel and drafting letter of demand), especially where such work spans multiple Scale items;
(iv) Where options exist in a Scale item for selecting a rate or amount, do not automatically select the top rate / amount. Consider not only who undertook the work and their applicable rate but also ensure that the amount claimed correlates to the nature of the work undertaken. For example, if a partner undertook clerical work, the appropriate lower amount commensurate with a clerk undertaking the work should be claimed, not the partner's rate;
(v) Photocopying is a discretionary item in the Scale. When claiming photocopying, consider the Federal Court's National Guide to Discretionary Items in Bills of Costs;
(vi) When including GST in the claims in the bill (see Part 6 of the Costs Practice Note), do so by incorporating the GST into each relevant amount claimed for the Scale item. Do not include one bulk-item for GST at the end of the bill;
NOTE: Where the Costs Applicant is not entitled to claim input tax credits, then costs may be claimed inclusive of GST for Scale items 1.1 and 12. This includes those Scale items that expressly require or permit the application of item 1.1, which are: items 3.1, 4.1, 5.1, 6.2, 7.1(a) and 11.1(1).
NOTE: Where GST is claimed on a Scale item other than 1.1 (eg. 3.1) the relevant Scale item followed by "/1.1" should be noted to show that the amount claimed has been calculated in accordance with Scale item 1.1 (eg. 3.1/1.1).
(vii) When claiming any loading for skill, care and responsibility, list the amount of the loading claimed and how it has been calculated (including any percentage applied) together with a concise clarification of the bases for it being claimed (see paragraph 5.15 of the Costs Practice Note, item 11 of the Scale and the Federal Court's Guide to Discretionary Items in Bills of Costs);
(c) Any claim for the preparation of the bill itself should be claimed in the disbursements table if a third party (eg. costs consultant) was engaged to prepare the bill. If the bill was prepared by a "in-house", it should be claimed in the costs table;
(d) Ensure that the bottom of each of the costs and disbursements claims tables are totalled; and
(e) Leave the "Amount taxed off" column blank. This is for use by the taxing officer.
Part F – Totals Claimed – Costs and Disbursements
1. Ensure that the Total of Claims table is completed.
2. Check that the amount claimed in the bill does not exceed the relevant costs that the Costs Applicant is liable to pay ("indemnity principle"). This is important for every bill and is particularly at risk of occurrence with bills prepared on an indemnity basis.
3. Leave the column marked "Amount taxed and allowed" blank. This is for use by the taxing officer.
1. For all bills, copies of receipts for each paid disbursement and copies of relevant accounts for each unpaid disbursement must accompany or be attached to the bill (r 40.18(b) of the Federal Court Rules). Each attachment should be attached in the order of the "claim number" in the Table of Disbursements (where practicable) and should reference that claim number at the bottom right-hand-side of the attachment.
2. For bills where a Costs Applicant is not entitled to claim an input tax credit (and therefore claims GST in the bill), a short cover-letter should accompany the bill to briefly clarify the basis of the non-entitlement (see paragraph 6.5 and 6.8 of the Costs Practice Note). If no letter is attached, the bill may be assessed on the assumption that the party is entitled to claim an input tax credit.
After Filing the Bill
1. Ensure that the bill is served on each party interested in the bill (see r 40.19 of the Federal Court Rules and paragraph 5.10 of the Costs Practice Note), together with any attached or accompanying correspondence / documents filed with the bill.
 The Dictionary is found at Schedule 1 of the Federal Court Rules (r 1.51).
 Where applicable, this practice note is also intended to cover third-parties not formally the subject of a costs order, such as insurers.
 In this context, "ADR" includes mediation (including a form of mediation for costs disputes described as a "confidential conference" in the Federal Court Rules, see 40.21 and following) and may involve a registrar as a consultant as to costs, or as part of an ADR process under Part 28 of the Federal Court Rules, or as a referee under Division 28.6 of the Federal Court Rules.
 See also rr 40.03 and 40.04 regarding when costs "follow the event" or are taken to be costs "in the cause".
 The use of the defined term "judgment" in the practice note is for convenience and is not intended to vary or derogate from that term's more formal meaning in the Act (see s 4 of the Federal Court Act) or the Federal Court Rules (see Dictionary).
 A taxing officer is a registrar under the Federal Court Rules – see the Dictionary. The use of the term "registrar" in this practice note is not intended to vary or derogate from a registrar's role when acting in a formal capacity as a "taxing officer" under the Federal Court Rules.
 See generally: Corcoran v Virgin Blue Airlines Pty Ltd  FCA 864; Haraksin v Murrays Australia Ltd  FCA 1133; King v Virgin Australia Airlines Pty Ltd  FCA 36 and Shurat HaDin, Israel Law Center v Lynch (No 2)  FCA 413.
 Under the Civil Dispute Resolution Act 2011 (Cth) the Court, when exercising a discretion to award costs, may take into account whether a party took genuine steps to resolve the dispute pre-litigation (see s 12 of that Act).
 This description of the indemnity principle is intended as a summary only and it is not intended to vary or derogate from the well-established description of the indemnity principle in relevant case law.
 Although it may be applied in certain appropriate circumstances, the lump-sum costs procedure is not intended to apply generally to interlocutory costs orders unless otherwise ordered. Parties are reminded of timing considerations in respect of interlocutory costs orders (see r 40.13 of the Federal Court Rules).
 Rule 40.19 requires service of the bill as "endorsed" by the Registrar. Since the introduction of the Electronic Court File ("ECF"), such endorsement on the bill (physically) no longer occurs and the timing of the estimate will be notified to the parties by way of correspondence from the Court.
 Any details for "loading" or "exceptional circumstances" may be included in Part C – Special Notes of the
Form 127 – Bill of Costs.
 The guidance set out in this practice note is relevant to the manner in which costs and the GST are dealt with in the Court and should not be taken to apply beyond that to such matters as how lawyers should charge their clients.
 In this endeavour, for those Costs Applicants that are not entitled to claim input tax credits, the Court will facilitate (in respect of certain Scale items) a method of claiming that takes that circumstance into account. The Court will also review the Federal Court Rules and Scale to further consider how best to address the GST and costs.
 The Scale items that expressly requires or permits the application of item 1.1 are: items 3.1, 4.1, 5.1, 6.2, 7.1(a) and 11.1(1).
 Amend the wording of the verification as needed to adjust for more than one Costs Applicant.
 For guidance – see item 11 of the Scale, Annexure B to this practice note and the Federal Court's National Guide to Discretionary Items in Bills of Costs.