Seeking a review of a taxation of costs arising from a bankruptcy matter? It is permissible, but strictly confined.

Key takeaways

Whilst the exercise of power by a Registrar of the Federal Circuit and Family Court of Australia is usually reviewable by a judge of the court, care must be taken when the power that has been exercised by the Registrar relates to the taxation of a bill of costs.

The power of review under section 256 of the Federal Circuit and Family Court of Australia Act (FCFCAA) is only in respect to the exercise of a power that was delegated to the Registrar pursuant to section 254 FCFCAA, and the power to tax a bill of costs is not delegated to a Registrar under that section.

However, Rule 40.34 of the Federal Court Rules (FCR) permits a party attending a taxation of costs to seek review of the taxation, and the FCR, insofar as they apply to bankruptcy matters, are incorporated into the Federal Circuit and Family Court of Australia (Division 2) Bankruptcy Rules. The scope of any such review is limited by the Rule itself.

Brief facts

In Lawrence v Sammut (No 3) the court was asked to consider an application for review of a taxation of costs from matters relating to bankruptcy proceedings. The application sought a general review of the Registrar’s taxation, apparently on the basis that it would proceed as a hearing de novo, as is the case with a review of a Registrar’s decision exercising a delegated power under section 254 FCFCAA.

Judgment

The court emphasised that Rule 40.34(2) FCR requires that an application for review state briefly, but specifically, the items in the bill that were subject to challenge and whether the party wants that item included, deleted or varied and, if varied the amount of the variation. Further, the Rule provides that no further evidence can be received on the review, and no ground of objection that was not taken at the original taxation can be raised. These requirements are mandatory.

Referencing Federal Court authority, the court noted that whilst the review of a decision of a taxing officer is permitted, it is only when it is contended that the taxation officer has preceded upon a wrong principle or where there has been an error in principle in determining whether an item should be allowed or in determining how much should be allowed. The court will be reluctant to interfere where the question is only whether the taxing officer has correctly exercised a discretion which he possesses and is purporting to exercise.

The court noted that the High Court had approached the matter by stating that although the court may control any decision of a taxing officer it was ‘at all times loathe to interfere with the decision of experienced taxing officers’, recognising that taxing officers were experts in the art of assessing costs whereas judges were not.

In this particular case, the application for review was not in the correct form in that it had not complied with the requirements of Rule 40.34 and was summarily dismissed.

Implications

The decision highlights the importance of recognising the limits available to a party who is aggrieved by a taxation of costs in bankruptcy proceedings. The right to have the decision of the taxing officer reviewed are confined by Rule 40.34 FCR.

It is important to note that the court will be most reluctant to interfere with a discretion properly exercised by a Registrar/Taxing Officer, and only in an extreme case would the court interfere if the review related to quantum only.