Aesthete No 3 Pty Limited ACN 127 464 966 v Gilmore Finance Pty Limited ACN 104 792 627 and Anor.

District Court of NSW|2017-07-27

Nature of proceedings - paragraph 1 The costs order - paragraph 5 The proceedings - paragraph 6 Issues on appeal - paragraph 15 Grounds of appeal - paragraph 17 The legal profession uniform law (nsw) (LPUL Act) - paragraph 18 The appellant's evidence - paragraph 21 The joint chronology - paragraph 23 The evidence of Mr Amirbeaggi - paragraph 24 The evidence of Mr kallipolitis - paragraph 47 The appellant's submissions - paragraph 49 The respondents' submissions - paragraph 60 Findings - paragraph 65 Disposition - paragraph 66 Orders - paragraph 68

nature of proceedings

These proceedings were commenced by way of Summons (current version being the Further Amended Summons Commencing Appeal) in relation to an appeal from a decision of a Costs Assessor, Mr Rosier, which was later affirmed by the Costs Review Panel on 5 September 2016.
The appellant's costs were claimed in the sum of $147,349.08. Of that, $77,864.08 was allowed by the Costs Assessor and affirmed by the Review Panel.
This appeal is brought pursuant to s89(4) of the Legal Profession Uniform Law Application Act 2014 (NSW) ("the Act") which provides that this appeal is: To be by way of re-hearing, and fresh evidence or evidence in addition to or in substitution for the evidence before the Review Panel or Costs Assessor may, with the leave of the court be given on the appeal.

the costs order

The order for costs giving rise to the assessment was made against the respondents by Registrar Walton on the New South Wales Supreme Court in case number 2015/270692 ("the Proceedings"). The respondents were required to pay the appellant's costs of the Proceedings on a party/party basis.

The proceedings

The Proceedings, it must be observed, involved matters of complexity and urgency. To a very substantial degree, added complexity and urgency were brought about by the respondents' conduct.
The appellant is the owner of property at 11 Barber Avenue, Kingswood ("the Property"). It owns the property as trustee of the Hospital Precinct Unit Trust ("HPUT"). Mr Amirbeaggi, a principal of Yates Beaggi Lawyers was, at all material times, the sole director of the appellant company. The property was the subject of a development consent and a number of pre-sales had been entered into.
Without prior notice to the appellant, on 31 August 2015, the first respondent appointed the second respondent as Receiver on the basis of an alleged breach of loan. Notice of a breach had not been notified to the appellant. Notice to Mr Amirbeaggi of the second respondent's appointment was received on 2 September 2015. At that time, the value of the Property was estimated to be between $10 million and $26 million. The large variation in the property's value is not material to this decision but can be explained simply as reflecting variations in the prospective value of the property. What is significant, however, was the threat the appointment of the Receiver may have posed to the overall value of the project.
Given the danger which the appointment had to the development, including approximately 60 pre-sale contracts that were entered to and lease issues, on 15 September 2015, the Proceedings were commenced by an approach to the Supreme Court Duty Judge. Between 2 and 15 September 2015, the appellant sought to pay out the first respondent the alleged debt of approximately $1.5 million and secure the removal of the second respondent. The circumstances leading to the commencement of proceedings for removal of the second respondent are set out in the affidavits of Mr Amirbeaggi sworn 15 and 16 September 2015. The need to commence the Proceedings was necessitated by the first respondent's appointment of the second respondent and its failure to co-operate with the appellant between 2 and 15 September 2015 regarding the amount of the debt which was to be discharged.
It is submitted on behalf of the appellant that urgency was required and detailed consideration was given to the form of the appropriate terms of relief. Relief could be obtained by challenging the Receiver's appointment or seeking his removal. The appellant submits that both options involve complex matters requiring urgent consideration. I accept that submission.
On 16 September 2015, following a contested hearing, the Receiver was removed and orders were made in respect of the provision of information by the respondents to the appellant.
Following the hearing on 16 September 2015, the respondents served affidavits from Mr Kallipolitis and Mr Gilmore which included serious allegations of default. The respondents indicated that they intended to rely upon that evidence on the question of costs, which was reserved by the Duty Judge.
As mentioned, costs were determined on 16 October 2015 following a contested hearing before the Registrar. I note that the Registrar made a number of findings, in determining the appropriate costs order, which bear upon the assessment of costs and the Proceedings generally. In particular, I note that the Registrar found: 1. the conduct of the defendants (respondents) leading up to the Proceedings was unreasonable; 2. the matter, the subject of the Proceedings before the Duty Judge, were urgent; 3. the plaintiff (the appellant) endeavoured to try and resolve the matter before coming to Court; 4. the appellant was quite diligent about that; 5. the appellant tried to pay as much as it could in advance of coming to Court; 6. they did everything they could but they were not getting the responses that they needed back from the defendants (respondents) in a timely or acceptable manner; 7. in the opinion of Registrar Walton, the appellant did not have any choice but to commence the Proceedings; 8. the Proceedings were not unnecessary; 9. once the Proceedings had been commenced, the defendants (respondents) had opportunities to consent to the orders sought but chose not to do so; 10. the respondents' failure to consent to the orders resulted in a hearing, including cross-examination and orders by the Court.
Having had the opportunity to read the volumes of material tendered on this appeal, I concur with the findings made by the Registrar. The matters referred to are some of the factors which informed considerations relevant to the determination of costs pursuant to s172 of the LPUL Act.

issues on appeal

The appellant submits that the principal issue on appeal is whether the disallowed costs items incurred by the appellant and claimed by the respondents were fair and reasonable in accordance with s76 of the Act, incorporating s172 of the Legal Profession Uniform Law (NSW) ("the LPUL Act") and it is submitted, and I agree, that consideration needs to be given to fairness and reasonableness of the following: 1. the items of work performed; 2. the time spent in performing the work; 3. the amount charged for performing the work.
Plainly, there is no challenge by the appellant in respect of those amounts which were allowed by the Costs Assessor and, in fact, the appellant has, quite fairly, conceded some items which were disallowed.

grounds of appeal

Leaving aside the complaints concerning procedural fairness, paragraph 3 of the Further Amended Summons sets out the grounds of appeal relating to the costs assessment. It is submitted that the Review Panel erred by reason of its failure to apply the provisions of s172(1) and (2) of the LPUL Act and as a result failed to determine the fair and reasonable costs in the matter, as they erred: 1. in failing to identify: 1. the urgency in the Proceedings; and 2. the volume of existing documents requiring review; and 3. as a result failed to identify and determine that the urgency and volume of documents: 1. added complexity to the Proceedings; and 2. justified the rate of $600 per hour (paragraphs 3 and 4); and 3. required the skill and experience of a senior practitioner (paragraphs 3 to 7); and 4. required from time to time the assistance of a second solicitor (Mr Yates) (paragraph 6, items 6 and 55 of Bill of Costs); and 5. required the resources of two counsel (paragraph 7), and 6. affected whether the Proceedings were conducted with regard to costs efficiently (paragraph 22), and 7. required photocopying to be carried out in-house so the appellant would not benefit from external suppliers' rates (paragraph 13, item 209); 1. in disallowing junior counsel's fees on the basis of a lack of proportionality (paragraph 7); 2. in determining a limited scope of the costs order being "the identification of the payout figure" (paragraphs 8 and 12); and 3. in placing undue weight on the fact that the solicitor and director were the same person (paragraphs 10 and 11); and 4. if items 5, 8, 11 and 72 were not understood, in not inspecting the files or seeking further submissions as to why the review of 67 folders was claimable or otherwise affording the appellant an opportunity to make these submissions (paragraph 11, item 5, 8, 11 and 72); and 5. in determining that the appellant should have disregarded the affidavit of the first respondent Mr Gilmore and not prepared a response or a brief to counsel and as a result disallowing $21,000 (at items 126, 127, 28, 129 and 131), despite: 1. that document being served in the Proceedings by the respondents; and 2. notice of non-reliance upon the affidavit was not given (in fact the respondents said they relied upon it); and 3. the relationship between the parties led to a reasonable expectation (as noted because of an express representation made) that the affidavit would be relied upon; (paragraph 12, items 126, 127, 128, 129 and 131); and 1. in determining photocopying rates at $0.30 per page (paragraph 13, item 209); and 2. in determining that $450 per hour was a fair and reasonable rate for costs consulting work (paragraph 4).

The legal profession uniform law (nsw) (LPUL Act)

The appellant relies upon s172 of the LPUL Act and submits that the Review Panel erred in its application of same.
Section 172 provides as follows: 1. A law practice must, in charging legal costs, charge costs that are no more than fair and reasonable in all the circumstances and that in particular are: 1. proportionately and reasonably incurred; and 2. proportionate and reasonable in amount. 1. In considering whether legal costs satisfy subsection (1), regard must be had to whether the legal costs reasonably reflect: 1. the level of skill, experience, specialisation and seniority of the lawyers concerned; and 2. the level of complexity, novelty or difficulty of the issues involved, and the extent to which the matter involved a matter of public interest; and 3. the labour and responsibility involved; and 4. the circumstances in acting on the matter, including (for example) any or all of the following-- 1. the urgency of the matter; 2. the time spent on the matter; 3. the time when business was transacted in the matter; 4. the place where business was transacted in the matter; 5. the number and importance of any documents involved; and 1. the quality of the work done; and 2. the retainer and the instructions (express or implied) given in the matter. 1. In considering whether legal costs are fair and reasonable, regard must also be had to whether the legal costs conform to any applicable requirements of this Part, the Uniform Rules and any fixed costs legislative provisions. 2. A costs agreement is prima facie evidence that legal costs disclosed in the agreement are fair and reasonable if-- 1. the provisions of Division 3 relating to costs disclosure have been complied with; and 2. the costs agreement does not contravene, and was not entered into in contravention of, any provision of Division 4.
Plainly, the thrust of the section is to ensure, in the circumstances referred to, that legal costs as allowed are both fair and reasonable.

the appellant's evidence

The appellant relied upon the following: 1. Affidavit of Mr Amirbeaggi sworn 28 April 2017 (Exhibit A); 2. Judgment of Registrar Walton dated 16 October 2015 (Exhibit B); and 3. Amended Chronology - which became a Joint Chronology (Exhibit C).
Before examining the affidavit evidence, it is convenient to set out the matters contained in the 36 events referred to in the Joint Chronology, agreed between the parties (Exhibit C).

the joint chronology

Exhibit C provides as follows: No Date Event Source 1 15 Jun 09 Appellant entered into Option Deed for an Option to purchase the property described as 11 Barber Avenue, Kingswood NSW (the Property). Para 24 of Affidavit of Farshad Amirbeaggi dated 28 Apr 17 (FA Affidavit) 2 3 Aug 11 Appellant exercises the Option to purchase the Property and exchanged a Contract for Sale (Contract). Para 23 FA Affidavit 3 8 Aug 12 Appellant enters into Deed of Loan secured by a Mortgage over the Property with the First Respondent, originally for a principal sum of $2,250,000 (Principal Sum). Para 25 of FA Affidavit and Tab 10 of Ex FA-1 4 29 Oct 12 Appellant reduces the Principal Sum owing by $450,000. Para 27 of FA Affidavit 5 7 Nov 12 Appellant reduces the Principal Sum owing by $300,000. Para 27 of FA Affidavit 6 8 Feb 13 Original loan repayment date, but varied by agreement, upon which Appellant paid higher interest rate without default for 29 months. Para 28 of FA Affidavit 7 31 Aug 15 Second Respondent appointed as a Receiver and Manager to the assets of the Appellant by the First Respondent, to recover the Principal Sum balance then being $1,500,000, without notice to the Appellant. Para 31 of FA Affidavit 8 2 Sep 15 Appellant first notified that the Second Respondent had been appointed as a Receiver and Manager. Para 29-30 of FA Affidavit and Tab 11 Ex FA-1 Appellant contacts Respondents' solicitors and indicates that it intends to commence legal proceedings seeking the removal of the Second Respondent. Paras. 4-5 of NK Affidavit. 9 3 Sep 15 Appellant paid the First Respondent the sum of $300,000 in partial reduction of the Principal Sum balance. Appellant notifies Respondents that it intends to approach the Duty Judge at noon on 4 September 2015. Para 32a of FA Affidavit Para 6 of NK Affidavit 10 11 Sep 15 Appellant paid the First Respondent the sum of $1,200,000 in complete discharge of the Principal Sum balance. Para 32b of FA Affidavit 11 11 Sep 15 at 4:50 pm Appellant receives letter from First Respondent's solicitor stating that the payout figure for the Principal Sum balance was $1,429,859.01, comprised of $1,404,701.30 for the debt, $17,157.71 for the Second Respondent's costs and $11,000 for Coleman Greig's costs (for First Respondent). Para 33 of FA Affidavit and Tab 12 of Ex FA-1 12 11 Sep 15 Appellant pays the First Respondent the sum of $28,157.71 representing the costs referred to above. Para 34 of FA Affidavit 13 14 Sep 15 Appellant pays the First Respondent the sum of $15,000 representing a final payment of interest on the Principal Sum balance then due. Para 35 of FA Affidavit 14 15 Sep 15 Respondents provide breakdown of balance owing by the Appellant. Ex. NK1, p 42ff 15 15 Sep 15 Proceeding commenced by the Appellant, on ex parte basis before Equity Duty Judge, Bergin CJ, and short service orders obtained (which were effected on 15 Sep 15). Para 38-40 of FA Affidavit Final relief sought by the Appellant included that the First Respondent provide a final pay out figure and retirement or removal of the Second Respondent as the Receiver of the Appellant. Contested hearing before Bergin CJ in Equity including cross examination of Mr Amirbeaggi, and Orders made for the Second Respondent to retire as the Receiver by 5pm on 16 Sep 15. Orders also made for Respondents to provide particulars of their pay out figures by 5pm on 17 Sep 15. 16 16 Sep 15 The Court noted that the Appellant paid $106,280.78 by bank cheque to the First Respondent, without prejudice to seek full and proper accounting. Para 42-43 of FA Affidavit The Court ordered the First Respondent deliver up a Discharge of Mortgage. Proceeding stood over for further Directions before Registrar in Equity on 23 Sep 15. 17 18 Sep 15 Appellant requests itemised bill from Coleman Greig for claimed fees of $11,000. Para 44 of FA Affidavit and Tab 16 of Ex FA-1 18 22 Sep 15 Respondents serve two Affidavits of Nicholas Kallipolitis dated 22 Sep 15, which they relied upon at the Costs Hearing before Registrar Walton on 16 Oct 15. Para 45 of FA Affidavit 19 23 Sep 15 Henry El-Hage of Counsel for the Respondents, served Affidavit of Lyle Gilmore sworn 22 Sep 15, and said to Mr Amirbeaggi in Court that it would be relied upon in relation to costs, and he might need to prepare a response. Para 47 of FA Affidavit 20 23 Sep 15 Parties appear before Registrar Walton and Justice MacDougall. Matter stood over for costs argument on 16 Oct 15 before Registrar Walton and directions are made for the service of written submissions. Para 49 of FA Affidavit 21 13 Oct 15 Appellant serves Appellant's submissions on costs. Para 51 of FA Affidavit and Page 494 of Ex FA-2 22 15 Oct 15 Appellant serves Affidavit of Mr Amirbeaggi dated 15 Oct 15. Para 51 of FA Affidavit and page 497 of Ex FA-2 23 15 Oct 15 Respondents serve submissions on costs. Para 52 of FA Affidavit and Page 502 of Ex FA-2 24 16 Oct 15 Costs argument before Registrar Walton after significant argument between parties. Para 53 of FA Affidavit and Tab 2 of Exhibit FA-1 25 16 Oct 15 Registrar Walton delivers Costs Order to the effect that the Respondents pay the Appellant's costs of the Proceedings. Para 12 of FA Affidavit and Tab 2 Ex FA-1 and Annexure A Transcript of 16 Oct 15 Judgment 26 19 Nov 15 Appellant lodges Application for Assessment of Party/Party Costs Assessment, originally claiming the sum of $124,675.21. Para 14 of FA Affidavit and Tab 3 Ex FA-1 27 5 Feb 16 Respondents lodge First Notice of Objections to the itemised bill of costs, annotated bill of costs by email dated 5 Feb 16. Para 15 and Tab 4 Ex FA-1 28 3 Mar 16 Appellant serves Itemisation of Party/Party Costs claiming $147,349.08. Para 14 of FA Affidavit and Tab 3 Ex FA-1 29 7 Apr 16 Respondents serve Second Notice of Objections to the itemised bill of costs. Para 15 of FA Affidavit and Tab 4 Ex FA-1 30 12 Apr 16 Costs Assessor delivers Certificate of Determination for $77,864.08. Para 16 of FA Affidavit and Tab 5 Ex FA-1 31 11 May 16 Appellant files Application for Review of Determination of Costs Assessor. Para 18 of FA Affidavit and Tab 7 Ex FA-1 32 5 Sep 16 Review Panel delivers Certificate of Determination of Costs Review, confirming Costs Assessor's decision. Para 19 of FA Affidavit and Tab 8 of Ex FA-1 33 29 Sep 16 Appellant files Summons Commencing an Appeal (Part 50). Court file 34 4 Oct 16 Appellant files Amended Summons Commencing an Appeal (Part 50). Court file 35 22 Dec 16 Appellant files and serves Further Amended Summons Commencing an Appeal (Part 50). Court file 36 22 Jun 17 and 27 July 17 Hearing of Appellant's Appeal. Court file

the evidence of Mr Amirbeaggi

The appellant relied upon two affidavits of Farshad Amirbeaggi affirmed 28 April 2017 (Exhibit A) and 3 August 2017 (which was filed late and not given an exhibit number. I now mark the affidavit of Mr Amirbeaggi affirmed on 3 August 2017 as Exhibit D).
Most of the matters referred to in the first affidavit of Mr Amirbeaggi are covered by the Joint Chronology extracted above.
Mr Amirbeaggi is a legal practitioner of considerable experience in a legal firm specialising in litigation. He was first admitted as a solicitor about 16 years ago and incorporated his own legal practice in 2004. I have no hesitation in accepting Mr Amirbeaggi as a legal practitioner experienced in litigation. He also presented as an honest and impressive witness.
The first affidavit of Mr Amirbeaggi demonstrated that he acted with great efficiency in response to the unexpected appointment of the second respondent. Within nine days of learning of the appointment of the second respondent, Mr Amirbeaggi had, to his mind, completely discharged the principal sum due to the first respondent. He also unquestionably reimbursed the first respondent for legal costs incurred in the appointment of the second respondent. Further, on 14 September 2015, he also arranged for payment by the appellant to the first respondent of the sum of $15,000.00 representing the final payment of interest on the principal sum then due.
Notwithstanding payment of the outstanding amounts, the first respondent refused to retire or discharge the second respondent, leaving the appellant company with no option but to make the application in the Proceedings before the Duty Judge.
As noted, I agree with the observations made by Registrar Walton on 16 October 2015 as to the conduct of the appellant and the respondents. The Proceedings before the Duty Judge were a consequence of the conduct of the respondents, principally the first respondent, in failing to notify the appellant of the default, appointing the second respondent without notice to the appellant and the repeated delay in providing information to the appellant by which discharge of its legal obligations could have been achieved without Proceedings being commenced.
The conduct of the appellant in the period from 2 September to 15 September 2015 was characterised by acting in circumstances of great urgency with a high degree of diligence. The need for urgency was created by the conduct of the respondents which threatened the reputation of the appellant and the property development.
Notwithstanding the co-operation displayed by the appellant to the respondents in the period prior to the commencement of the Proceedings and, indeed, after the respondents refused to co-operate with the appellant in the discharge of the second respondent, it was only by order of Bergin CJ in Equity on 16 September 2015, that the second respondent was retired. This could have and probably ought to have been done by consent.
The costs application before Registrar Walton was complicated by the conduct of the respondents who served upon Mr Amirbeaggi a detailed affidavit of Mr Gilmore sworn 22 September 2015. In paragraph 47 of his first affidavit (Exhibit A) Mr Amirbeaggi referred to a conversation that took place between counsel for the respondents and himself in which it was made clear that the respondents intended to rely upon the affidavit of Mr Gilmore. It is worth noting that attached to the affidavit of Mr Gilmore were two folders containing extensive material. This material required careful examination and consideration. That process was undertaken by Mr Pritchard of senior counsel with Mr Amirbeaggi after 23 September 2015.
Notwithstanding the appellant's success before Bergin CJ in Equity, costs were hard fought by the respondents. In the end, the Court made the order that the costs ought to follow the event and the respondents were to pay the appellant's costs of the Proceedings.
On pages 12-20 of Exhibit A, Mr Amirbeaggi sets out the costs items in dispute, the subject of this appeal. It seems that the dispute primarily relates to the following: 1. the appropriate hourly rate to be allowed; 2. the time unit amount to be allowed; 3. the scope of works performed on behalf of the appellant.
In relation to the first matter, I accept the evidence of Mr Amirbeaggi that a solicitor with at least 15 years post-admission experience practising in the Sydney CBD is charged out at between $600.00 to $700.00 per hour plus GST. I note that it was charged at $600.00 per hour but reduced on assessment to $550.00 per hour. I consider that to be unreasonable and find that the costs should be calculated on the basis of an hourly rate of $600.00 per hour plus GST.
As to the second matter, I accept the evidence of Mr Amirbeaggi that "the six minute unit is a standard measurement of time for calculating costs" (Exhibit A, paragraph 59).
The remaining matter, namely the scope of works, seems to have been focussed upon the need for the appellant's lawyers to review some 63 folders (out of a total of 180 folders) of documents created since the inception of the Trust and the property development. Mr Amirbeaggi complained in his affidavit (Exhibit A, paragraph 63): At no time did the Costs Assessor or the Review Panel inspect the 63 folders at my offices, nor did the Costs Assessor or Review Panel invite the Appellant's further submissions as to the reasons for my review of the 63 folders.
As for all three matters I prefer and accept the evidence of Mr Amirbeaggi over the reasoning of the Costs Assessor and the Review Panel.
As this is a rehearing of the costs assessment, it is not necessary to analyse and make findings as to failures on behalf of the Costs Assessor or the Review Panel, however, it seems to me that as a matter of common practice, enquiries ought to have been made as to the reason the work undertaken before the costs for that work was disallowed.
In paragraph 65 of his affidavit (Exhibit A), Mr Amirbeaggi sets out the need for reviewing the 63 folders of documents. It is worth noting that it was done on the recommendation of counsel to identify answers to a number of issues in the Proceedings which are set out in paragraph 65 (a.- f.) of the affidavit (Exhibit A).
There was also a question of set-off between the appellant and the first respondent which further complicated the matters in dispute. That process was not assisted by the changing position of the first respondent, referred to in paragraph 67 of the affidavit (Exhibit A).
The seriousness of the conduct undertaken by the first respondent and its repercussions were referred to by Mr Amirbeaggi in paragraph 68 of the affidavit (Exhibit A). I accept that the matters referred to in that paragraph were valid and serious considerations which justified close attention to meeting the allegations made against him. Mr Amirbeaggi stated: It warranted urgency, the engagement of my undivided attention, and the engagement of Messrs Pritchard SC and Fernon (of counsel). (Exhibit A, paragraph 69).
Further, Mr Amirbeaggi explained in his affidavit the reason for not delegating the task to other members of his firm. He had familiarity with the project and the documents relating thereto by reason of his involvement over a period of seven years both as the director of the appellant and the solicitor acting for same. I accept his evidence that had he delegated the work to another staff member without that same familiarity then significantly more time would have been required and greater costs incurred.
The Costs Assessor also disallowed all of junior counsel's fees (items 87 - 200). In paragraph 79 of his affidavit (Exhibit A) Mr Amirbeaggi sets out the reasons for two counsel being retained in respect of the matter. In my opinion, the reasons provided are rational and warranted the engagement of both counsel.
Mr Amirbeaggi was cross-examined by counsel for the respondents but this did not detract from his evidence-in-chief, namely the primary affidavit (Exhibit A). In fact, cross-examination emphasised the need for the appellant to deal with the affidavit of Mr Gilmore, the content of which Mr Amirbeaggi referred to in cross-examination as "quite heinous" [T76.49].
In my view, the respondents, having served the affidavit of Mr Gilmore and expressed an intention to rely upon it on the question of costs, should not now be heard to criticise the appellant's attempts to respond to it.

The evidence of Mr kallipolitis

Mr Kallipolitis is the solicitor for the respondents. He swore an affidavit dated 16 June 2017 (Exhibit 1). A lot of the material contained in that affidavit has been subsumed by the Joint Chronology settled between the parties. One thing which is demonstrated by the affidavit of Mr Kallipolitis is the fast moving pace of the dispute from 2 September 2015 through to the orders made on 16 September 2015.
Commencing at paragraph 74 of his affidavit (Exhibit 1) Mr Kallipolitis responded to the items the subject of the appeal. I have given careful consideration of the matters raised in that section of his affidavit and the material referred to in earlier objections. I am not persuaded that Mr Kallipolitis' objections to the appellant's Bill of Costs are justified or reasonable in the circumstances. I prefer and accept the evidence of Mr Amirbeaggi.

the appellant's submissions

It is submitted on behalf of the appellant that the relevant matters for consideration are set out in s172 of the LPUL Act. It is stated on behalf of the appellant that: Section 172 provides that the costs must be fair and reasonable, having regard to various matters including proportionality, the level of skill and experience required, the level of complexity of the issues involved, the labour and responsibility involved and the circumstances in acting on the matter, including its urgency, time spent, the business and importance of the issues involved. (Appellant's Submissions ("AS"), paragraph 23).
It is further submitted that the whole dispute and the need for the litigation had "very serious legal and practical consequences for the parties and third parties" (AS, 24). I accept that submission.
Further, counsel for the appellant submitted "That the Proceedings were run in an efficient and effective manner was [sic] because of the experience, knowledge and hard work that was brought to bear by the legal team" (AS, 24). I also accept that submission.
Counsel for the appellant stated that: The cost of the Proceedings were greatly increased by the behaviour of the respondents, contesting every point, including costs. (AS, 25).
I previously made observations to this effect and I accept that submission.
Considerable costs were incurred (perhaps unnecessarily but reasonably) as a consequence of the respondents' service and express intent to rely upon the affidavit of Mr Gilmore sworn 22 September 2015. That required a complete review of all matters relevant to the relationship between the appellant and the first respondent, including the persons involved in each of the companies.
Submissions were made by the appellant (AS, 30-33) regarding the reasonableness of the hourly rate of $600.00. I have already expressed my view concerning that matter and I find that a charge-out rate of $600.00 plus GST per hour was both fair and reasonable.
Submissions were also made by the appellant concerning counsels' fees (AS, 39-42). I accept those submissions and find that it was fair and reasonable for two counsel to be retained in the Proceedings and that the work performed by them was reasonable.
Schedule A to the appellant's submissions sets out a careful analysis of the 209 items claimed in respect of costs. Without going through each of those items specifically, but having reviewed them all for the purpose of these reasons, I accept the appellant's comments, most of which reflect the findings made above.
In Supplementary Submissions dated 4 August 2017, counsel for the appellant dealt with the "indemnity issue". It is clear that the costs were the subject of a detailed Bill of Costs totalling $147,349.08 which were billed by Yates Beaggi Lawyers and paid by the appellant. I make findings accordingly.
I also note, in respect of this issue, that the Costs Assessor rejected the respondents' submissions in relation to the indemnity principle. The respondents did not appeal from that decision and ought not now be entitled to rely upon it on this appeal. In any event, I find that it does not arise, for the reasons provided.

the respondents' submissions

In the Introductory section of the respondents' submissions there is reference to three reasons why the appeal must fail.
The first is that it ignores the indemnity principle. I have dealt with this above.
The second is that it ignores the nature of party/party costs. I do not accept that submission. As stated above the utilisation of Mr Amirbeaggi as the solicitor acting for the appellant saved considerable costs given his prior knowledge and experience of the matters in dispute. Had other lawyers been engaged then the costs would have been considerably greater.
The third basis advanced by the respondents for the appeal failing is that it ignores the principle of proportionality. I also reject that submission. The costs incurred in the Proceedings were, in part, made necessary by the conduct of the first respondent and the potential significant deleterious effect the first respondent's conduct may have had if not addressed with the efficiency and professionalism displayed by the legal representatives acting for the appellant. In particular, I again note the matters referred to in paragraph 68 of the affidavit of Mr Amirbeaggi (Exhibit A) as the "significant consequences" of the first respondent's conduct, namely: 1. affecting the credit of the appellant and Mr Amirbeaggi personally as its director; 2. the contractual arrangements the appellant was engaged in including off-plan pre-sale contracts for sale for property with a proposed development on the property; 3. the market effects on the value of the property and of the appellant having an external administrator appointed to it; 4. the credit and professional effects upon Mr Amirbeaggi as a director of a company under external administration.
Given the value of the project being undertaken by the appellant and the extent to which that was put at risk by the conduct of the first respondent, I find that the costs incurred by the appellant were proportionate and reasonable.

findings

For the reasons given above, I make the following findings: 1. that the costs incurred by the appellant were fair and reasonable in all the circumstances within the meaning of s172(1) of the LPUL Act and having regard to the considerations of s172(2), save for the amount of $5,632.70 conceded by the appellant; 2. that the hourly rate ($600.00, plus GST) charged to and paid by the appellant was fair and reasonable; 3. that a time unit period of six minutes is reasonable; 4. that the claim advanced for costs by the appellant does not offend the indemnity principle; 5. that the costs sought were charged to the appellant; 6. that the costs sought were paid by the appellant; 7. that the amount claimed is consistent with party/party costs principles; 8. that the amount claimed conforms with the principles of proportionality.

DISPOSITION

It follows that the appeal succeeds. The costs claimed were in the amount of $141,666.38. The Costs Assessor allowed $77,864.08. I find that the appellant is entitled to the full amount.
Accordingly, there is judgment for the appellant in the amount of $141,660.38.

orders

Accordingly, I order: 1. appeal allowed; 2. judgment for the appellant in the sum of $141,666.38; 3. that the respondents pay the costs of the proceedings in this Court and the appellant's costs before the Review Panel; 4. that the parties have liberty to apply on seven days' notice to vary the order in (c), if necessary and generally; 5. that the Exhibits be returned.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 January 2018

At a glance

Court

Decision date

Source

Judgment (17 paragraphs)

Parties

Legislation Cited (1)

Cited By (4)