Background
The applicants are the joint and several special purpose liquidators of the Hastie Group — a collection of companies wound up in 2013. The Hastie Group and its liquidators had pursued complex litigation against subcontract counterparties (the “Main Proceedings”), which was funded by the Commonwealth under the Fair Entitlements Guarantee Scheme, a program designed to recover funds paid to former employees of insolvent companies. Hall & Wilcox, a national law firm, had acted for the Hastie Group throughout those proceedings, briefing senior and junior counsel across two principal cases. The Main Proceedings were wholly unsuccessful: liability was decided against the Hastie Group in 2022, and a reformulated appeal ground was dismissed by the Full Court in 2024.
Following the failed litigation, the special purpose liquidators were appointed and commenced proceedings challenging whether more than $18 million in legal fees charged by Hall & Wilcox were “fair and reasonable.” Because the Hastie Group entities are classified as “commercial or government clients” under s 170 of the Legal Profession Uniform Law, the standard costs assessment process under that legislation was unavailable to them. The applicants sought to invoke the Federal Court’s own jurisdiction to refer the costs dispute to an expert costs assessor as a referee.
The matter came before Needham J on 9 April 2026 for a contested case management hearing. Both parties agreed that a referral to a costs assessor should occur. The dispute concerned timing: specifically, whether certain legal and factual questions (the “Excluded Matters,” relating to the basis on which particular work was undertaken and billed) should be resolved by the Court before or after the costs assessor conducted its review.
The Court’s Holding
Needham J held that referral of the costs question to an expert costs assessor was appropriate, accepting that the assessment of over $18 million in fees across three complex hearings was a specialist task that would unduly burden the Court if undertaken otherwise. Her Honour then addressed the central dispute on timing, concluding that the “Excluded Matters” — legal and factual questions going to the basis on which certain work was undertaken — must be determined by the Court first, before the matter is referred to the costs assessor.
Her Honour reasoned that the answers to those threshold legal questions are not peripheral but integral to the costs assessor’s task. Whether particular work was appropriately undertaken, how it should have been allocated among practitioners of varying seniority, and whether costs were reasonably incurred are all questions whose answers depend on findings that only the Court can make. To send the matter to the costs assessor while excluding those questions would, in the Court’s view, produce an unworkable and incomplete reference, particularly given the complexity of the proceedings and the shifting legal landscape that characterised the litigation.
Her Honour acknowledged this approach requires two separate judicial hearings rather than one, and expressly considered the High Court’s caution in Tepko Pty Ltd v Water Board [2001] HCA 19 that the savings from separate-question trials are “often illusory.” Nonetheless, she was satisfied that once the Excluded Matters are determined, the costs assessor’s work will be better informed and the subsequent adoption hearing likely shorter. She ordered the parties to provide draft orders setting out the separate questions for determination within 14 days, and made an interim suppression order over the appendix to the reasons pending finalisation of those orders.
Key Takeaways
- The Federal Court confirmed it has jurisdiction to refer a legal costs dispute to an expert costs assessor as a referee under ss 23 and 39 of the Federal Court of Australia Act 1976 (Cth), particularly where the standard statutory costs-assessment process is unavailable to the client.
- Where threshold legal and factual questions are integral to the costs assessor’s task — not merely ancillary — the Court should determine those questions first, even at the cost of requiring two separate hearings, to ensure the reference is workable and the assessor has a complete factual foundation.
- Commercial and government clients are excluded from the Legal Profession Uniform Law’s standard costs assessment regime (s 170 LPUL), leaving the Federal Court’s own powers as the primary avenue for challenging solicitor fees; this exclusion was treated as a relevant “special fact” supporting the exercise of the Court’s discretion to refer.
- The risk that credit findings at a preliminary hearing might affect the docket judge’s ability to preside at the adoption stage was considered but not accepted as a decisive reason to avoid a separate-question order, as disqualification is not automatic.
Why It Matters
This decision provides practical guidance for liquidators and other “commercial or government clients” who are locked out of the standard costs-assessment regime and must rely on the Federal Court’s inherent and statutory powers to challenge solicitor fees. It confirms that the Court will exercise those powers where the quantum is significant and the statutory remedy is unavailable, and it articulates a clear preference for sequencing: legal questions that inform the scope and basis of a costs assessment should be judicially resolved before the assessor begins work, even if that means additional hearings.
The case also highlights the tension between efficient case management (minimising hearings) and the integrity of the reference process (ensuring the assessor has complete information). Needham J’s resolution — determining legal questions first — will be of interest to practitioners managing large insolvency-related costs disputes and to costs assessors asked to evaluate fees incurred across complex, multi-stage litigation.