FEDERAL COURT OF AUSTRALIA Grimaldi v Chameleon Mining NL (No 3) [2014] FCA 529 Citation: Grimaldi v Chameleon Mining NL (No 3) [2014] FCA 529 Parties: PHILLIP FELICE GRIMALDI v CHAMELEON MINING NL and MURCHISON METALS LIMITED File number: NSD 68 of 2011 Judge: PERRAM J Date of judgment: 22 May 2014 Catchwords: PRACTICE AND PROCEDURE – application to set aside certificate of taxation – Federal Court Rules 2011 (Cth) r 39.05 – whether sufficient merit to warrant setting aside certificate Legislation: Federal Court Rules 2011 (Cth) rr 4.04(1), 39.05(a), 39.35, 40.20, 40.21(1) and 40.32(2) Cases cited: 3D Funtimes Limited v Intellec Development Group Pty Ltd (No 2) [2011] FCA 407 cited Bayley & Associates Pty Ltd v DBR Australia Pty Ltd [2014] FCA 346 considered Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 cited Jones v Dunkel (1959) 101 CLR 298 cited Date of hearing: 14 May 2014 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 25 Counsel for the Appellant: Mr H Somerville Solicitor for the Appellant: Bridges Lawyers Counsel for the First Respondent: Mr C Withers Solicitor for the First Respondent: Bennett + Co IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 68 of 2011 BETWEEN: PHILLIP FELICE GRIMALDI Appellant AND: CHAMELEON MINING NL First Respondent MURCHISON METALS LIMITED Second Respondent JUDGE: PERRAM J DATE OF ORDER: 22 MAY 2014 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The application be dismissed. 2. The appellant pay the costs of the first respondent. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 68 of 2011 BETWEEN: PHILLIP FELICE GRIMALDI Appellant AND: CHAMELEON MINING NL First Respondent MURCHISON METALS LIMITED Second Respondent JUDGE: PERRAM J DATE: 22 MAY 2014 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The appeal in Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296 was conducted over eight days. Ultimately Mr Grimaldi's appeal was dismissed with costs. An application for special leave to appeal to the High Court was unsuccessful. On 11 December 2013 Chameleon Mining NL's ("Chameleon's") solicitors filed a bill of costs with the Court claiming an amount of $624,223.25 for its costs and disbursements of the appeal brought by Mr Grimaldi. This bill of costs was served on Bridges Lawyers on 7 January 2014. That firm had instructions to accept service of such a bill but were not then on the record. On the record instead was Mr Martin Woods of M J Woods & Co who had represented Mr Grimaldi in the appeal itself. 2 Upon receipt of a bill of costs Federal Court Rule ("FCR") 40.20 provides for the taxing officer to make an estimate of the appropriate total for which a certificate of taxation is likely to issue before embarking upon the burdens of taxation. Once the estimate is issued the parties have twenty-one days in which to object (FCR 40.21(1)) at which time, if they have not, a certificate of taxation issues in the amount of the estimate (FCR 40.20(4)). Such a certificate when issued has the force and effect of an order of the Court (FCR 40.32(2)). 3 In this case, the taxing officer issued an assessment on 3 February 2014. A copy of it was certainly sent to Chameleon's solicitors because there is no question but that they received it. The copy they received shows that it was also addressed to M J Woods & Co at Level 4, 50 Park Street, Sydney. Here matters get a little complex. Although Bridges Lawyers had accepted service of the bill of costs they had not filed a notice of change of solicitor as required by FCR 4.04(1) at this time. 4 There is some evidence, to which I will return, that Mr Woods did not receive the estimate. Certainly Mr Grimaldi says that he was unaware of it until the morning of 7 March 2014. On 5 March 2014 the Court issued a certificate of taxation in the amount of $477,900, being the amount of the estimate. This occurred because 21 days had passed since the issue of the estimate and because no party had objected to it. Chameleon's solicitors then sent the certificate, on 7 March 2014, both to Mr Woods (who was on the record) and Bridges Lawyers (who were not) demanding payment of the $477,900 by Wednesday 12 March 2014. 5 As matters then appeared to Bridges Lawyers, one possible explanation for how this unfortunate state of affairs had occurred was that Mr Woods had received the original estimate (since he was on the record) but had failed to bring it to anyone's attention. However, a solicitor from Bridges Lawyers spoke with Mr Woods and, shortly afterwards, on 8 March 2014 received an email from him which read: 'I refer to our recent telephone conversation. I have not sighted the Courts Notice of its preliminary assessment and can find no record of this document being received into our office.' 6 Bridges Lawyers then sought to persuade Chameleon's solicitors to consent to the setting aside of the certificate of taxation. Those efforts were unsuccessful. On 28 March 2014, Mr Grimaldi then filed the present application to set aside the certificate of taxation. 7 Because of FCR 40.32(2) the certificate of taxation has the effect of an order of the Court. It does not necessarily follow that it is an order of the Court (so that it can be set aside as an order) but the parties were content to assume that it was and I proceed accordingly. 8 In correspondence and in argument before me Chameleon's representatives asserted that Mr Grimaldi's application was under FCR 39.05(a) which permits the setting aside of an order or judgment which 'has been entered' if '(a) it was made in the absence of a party'. This was also Mr Grimaldi's position. FCR 39.05(c) permits the setting aside of interlocutory orders. There was no submission made to me that a certificate of taxation was interlocutory. 9 The certificate of taxation was signed by a Deputy District Registrar and had affixed to it the seal of the New South Wales District Registry of the Court. If it was an order, it was therefore entered: FCR 39.35. Accordingly, I proceed on the basis that the application was made under FCR 39.05(a). 10 Mr Withers of counsel, who appeared for Chameleon, submitted that it was necessary for Mr Grimaldi to prove: first, that he had not received the estimate; and, secondly, that there was some reason to believe that if now allowed to contest Chameleon's bill of costs that he would achieve some reduction of it. Mr Withers submitted that Mr Grimaldi could succeed on neither count. (a) Was the order made in Mr Grimaldi's absence? 11 According to Chameleon whilst it was true that Mr Woods had said in his email of 8 March 2014 that he had not received the estimate and that he could not find any record in his office of it having been received there was more to this than met the eye. In Chameleon's written submissions filed on 1 May 2014 it had been said that little weight should be given to Mr Woods' 'hearsay' evidence to this effect. That hearsay was, of course, admitted without objection before me. 12 Before me, the hearsay argument was not abandoned but the real thrust of the argument became that Mr Woods had not given any detail of the searches he had conducted for the missing document in his email and the Court could not therefore be confident that adequate searches had been undertaken. The point was made that Mr Woods was a witness who was available to Mr Grimaldi and he had not been called or made available for cross-examination. Reference was made to Jones v Dunkel (1959) 101 CLR 298 and Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389. It was submitted that Mr Woods' email would be a sufficient basis to infer that he had not done an adequate search and, in light of Mr Grimaldi's failure to call him as a witness, the Court could more comfortably draw that inference. 13 During the hearing it emerged during the address of counsel appearing for Mr Grimaldi that his solicitors had tried to secure the attendance of Mr Woods but that he did not respond. In particular, he had been sent a draft affidavit which he had not executed or returned. Accordingly, no inference was to be drawn against Mr Grimaldi for not calling Mr Woods. 14 As I see it, the possibilities as to the delivery of the taxation estimate are that: (a) due to clerical error the taxing officer never sent the estimate to Mr Woods; (b) it was sent but lost in the post; (c) it was received by Mr Woods' firm but lost internally; or (d) it was received by Mr Woods and his 8 March 2014 email is not correct. 15 Mr Withers properly eschewed reliance upon (d). The choice on the facts is therefore between three scenarios under which in every case it is accepted that the estimate did not come to the actual attention of Mr Woods. In the case of (a) and (b) this is because of some administrative default in the Federal Court's letter sending system or a default in the general postal system. In the case of (c) it is a default either in the administrative arrangements within Mr Woods' firm dealing with the handling of mail or with Mr Woods' skills at searching his office for the missing document. Whichever it is, however, in none of them did the estimate come to Mr Woods' actual attention. 16 I propose to assume in Chameleon's favour that cross-examination of Mr Woods would have revealed that Mr Woods' procedures were less than satisfactory. To be clear, I am making an assumption and not a finding in that regard. Even making that assumption, however, I do not see that it would provide a basis for concluding that the order was not made in the absence of Mr Grimaldi. This is because the fact would remain that Mr Grimaldi had ended up with an order against him without the possibility of being heard. Regardless of whether Mr Woods should have located the estimate (assuming it was sent to him) the short of the matter is that he did not. The power in FCR 39.05(a) is, therefore, enlivened. (b) Should the certificate be set aside? 17 I turn then to Mr Withers' second contention. It should be accepted that, generally speaking, the Court will not set aside an order under FCR 39.05 unless it is shown that a step may thereafter be taken which is of sufficient merit to warrant the setting aside of the order: see 3D Funtimes Limited v Intellec Development Group Pty Ltd (No 2) [2011] FCA 407 at [6] per Siopis J. That is to say, an order will not be set aside unless doing so is shown to have some utility. 18 Mr Withers' point was that Mr Grimaldi had not proved on the present application that letting him back in to challenge the bill of costs was likely to lead to any different result from that brought about by the preliminary estimate. He submitted that the bill of costs was $624,223.25 and that the notice of preliminary estimate was $477,900 which was a difference of $146,323.25 or 23.44%. My attention was draw to the decision of Foster J in Bayley & Associates Pty Ltd v DBR Australia Pty Ltd [2014] FCA 346 where his Honour, in the course of making a lump sum costs order, accepted on the evidence before him that the likely sum which would be recoverable would be $729,223.98 to which his Honour then applied some further, presently irrelevant, deductions. What was critical was his Honour's acceptance at [20] of paragraph 25 of the affidavit of Mr Dudman, an expert in the assessment of costs. In that paragraph, Mr Dudman opined that a bill of costs would typically be reduced on a Federal Court taxation by between 5% and 15%. 19 Mr Somerville for Mr Grimaldi objected to my treating this as evidence. Mr Withers said that it was a recent case showing the practice of the Court. If Foster J's remarks had been made on the basis of a review of a taxation decision I might be minded to accept that submission, but his Honour's statement was merely fact finding in another case and as such is not evidence in this case. 20 The point of this debate was to show that in this case the discount which had been applied by the taxing officer (23.44%) was larger than that applied in the usual case explained by Mr Dudman (5%-10%) and hence that Mr Grimaldi's proposed objection to the bill of costs was unlikely to achieve much. I do not think I can accept that submission because I would need evidence of the 5%-15% discount which is not constituted by a reference to the reasons of Foster J. 21 Mr Withers also submitted, however, that Mr Grimaldi had failed to point to any reason why the estimate of $477,900 might be incorrect. This is true. It was not submitted to me that there was some glaring (or any) element of the bill of costs which should arguably be disallowed. Instead the point developed in correspondence (and again before me) was simply that Mr Grimaldi wished to exercise his right to have the bill of costs taxed. 22 I do not see that I can avoid the force of Mr Withers' submission. There is nothing before me to indicate that Mr Grimaldi has any particular complaint about the bill of costs or that there is some reason, even if only in outline, to think that the estimate of $477,900 is wrong. The highest it could be put was Mr Grimaldi's observation to his solicitor that his own costs on the appeal were much less than Chameleon's. But he does not say how much less or consider the nature of their respective representation before the Full Court. This small statement does not suffice to discharge the burden. 23 It is difficult for me to say, therefore, that setting aside the certificate of taxation would be likely to achieve anything. Because of the nature of the present application, it was incumbent upon Mr Grimaldi to prove something about this but he has not. Conclusion 24 Whilst I conclude that the certificate of taxation was made in the absence of Mr Grimaldi and that the power in FCR 39.05(a) is enlivened, I am not satisfied that Mr Grimaldi has shown that there is any point in setting it aside. 25 Accordingly, I dismiss the application with costs. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram. Associate: Dated: 22 May 2014