Alawadi v Widad Kamel Farhan trading as The Australian Arabic Panorama Newspaper

Errors in relation to the sum the defendant claims

1. Before proceeding further, I should note that the sum claimed in the gross sum costs order is not actually the balance of the costs remaining after this figure of $17,884 was paid (this sum would be $16,116). The solicitors for the defendant made an unfortunate error in assessing the amount for which a gross sum costs order was claimed and have only claimed $9,318.48. Although Ms Amato notes the correct figure at paragraph 12 ($16,116), this was erroneously stated in her instructing solicitor's affidavit to be $9,318.48 and Ms Amato has proffered the lower sum as being the amount claimed, in part because the costs were assessed on a solicitor and client basis where I had not made an order for costs on that basis, and in part to allow for a 20% discount on costs of the kind commonly made in gross sum costs orders.
2. I also note that this sum was claimed under r 12.10 UCPR. It was acknowledged in the course of submissions that this rule could not apply to proceedings where part of the original proceedings (as opposed to fresh proceedings) were the proceedings the subject of the application.
3. As no application for orders under s 67 could be made unless costs were due and owing, I expressed the view in the course of the argument before me that I will be prepared to make a gross sum costs order for the smaller sum sought (namely $9,318.48) and the application for the stay proceeded on that basis. I now set out my reasons for doing so, notwithstanding the errors made in relation to the assessment of this sum.

The requirements for a gross sum costs order

1. Section 98(4)(c) Civil Procedure Act 2005 (NSW) entitles the parties to seek a specified gross sum rather than assessed costs. The questions for determination when such an application is made are: 1. whether the issues in question are appropriate for determination on a gross sum basis (ChongHerr Investments Ltd v Titan Sandstone Pty Ltd [2007] QCA 278 at [6]); and 2. whether the court can be satisfied, from the material available, that it can arrive at an appropriate sum on the materials available (Colquhoun v District Court of New South Wales (No 2) [2015] NSWCA 54 at [6]).

Whether a gross sum costs order is appropriate in the circumstances

1. Section 98(4)(c) Civil Procedure Act 2005 (NSW) gives the court discretion to award costs which is not confined and which may be exercised for the purpose of awarding a gross sum costs order whenever circumstances warranted: Harrison v Schipp (2002) 54 NSWLR 738 at [21]-[22]. Giles JA stated in [22]: "[22] Of its nature, specification of a gross sum is not the result of a process of taxation or assessment of costs. As was said in Beach Petroleum NL v Johnson at 124, the gross sum "can only be fixed broadly having regard to the information before the Court"; in Hadid v Lenfest Communications Inc at [35] it was said that the evidence enabled fixing a gross sum "only if I apply a much broader brush than would be applied on taxation, but that ... is what the rule contemplates". The approach taken to estimate costs must be logical, fair and reasonable (Beach Petroleum NL v Johnson at 123; Hadid v Lenfest Communications Inc at [27]). The power should only be exercised when the Court considers that it can do so fairly between the parties, and that includes sufficient confidence in arriving at an appropriate sum on the materials available (Wentworth v Wentworth (CA, 21 February 1996, unreported, per Clarke JA)."
2. In Hamod v State of New South Wales [2011] NSWCA 375 at [816], Beazley JA noted the relevant factors as follows: "[816] The terms of s 98(4), together with the more general considerations reflected in the Civil Procedure Act, ss 56(1), 57(1)(d) and 60, suggest the factors that merit particular consideration include: the relative responsibility of the parties for the costs incurred (for example, Harrison v Schipp); the degree of any disproportion between the issue litigated and the costs claimed; the complexity of proceedings in relation to their cost; and the capacity of the unsuccessful party to satisfy any costs liability: Ritchie's Uniform Civil Procedure NSW at [s 98.45]."
3. As Garling J explains in Re Bar-Mordecai - Application - Ms Daych (No 3) [2014] NSWSC 1083 at [22], it is open to the court to exercise this power where it is desirable to avoid the expense, delay and aggravation likely to be involved in a contested costs assessment, and also where the incurring of additional costs generated by a formal assessment would disadvantage the successful party.
4. The circumstances of these defamation proceedings are exceptional. There is no doubt that the seven claims which have been struck out are concluded and the successful defendant is entitled to seek a costs order now in relation to those claims. The amount in question is small. There is a history of delay by the plaintiff in these proceedings as is set out in my earlier judgments and there is much to be said for avoiding the costs and delay of assessment of costs in circumstances where the parties must continue to litigate the sole remaining claim for defamation.
5. This is a clear case where the exercise of discretion is appropriate and accordingly, I am satisfied that the unusual facts and circumstances of this case make it eminently suitable for a gross sum costs order of this kind.

Can the court have confidence in arriving at an appropriate sum on the materials available?

1. This is something of a vexed question because of the quite considerable error made by the solicitors for the defendant in seeking a sum which is well below the total costs as set out in the affidavit of Mr Mitry. However, as this error operates in favour of the plaintiff, the plaintiff's opposition to the accuracy of the mathematics for the sum sought is a factor to which I have given little weight.
2. The affidavit of Mr Mitry sets out the basis for charging and the work in question, as well as allowing for an 80% recovery as opposed to a 100% recovery. As approximately three quarters of the costs are counsel's fees, which are generally not reduced to a significant extent on assessment, I am satisfied this is an appropriate percentage. The real problem that the assessment of costs faces is that it is prepared on a solicitor/client basis when the costs orders are made were on a party/party basis. This is a significant problem and but for the mathematical error made by the solicitors for the defendant, I would not have been prepared to consider the making of a gross sum costs order.
3. The smallness of the sum involved is in my view a significant factor to take into account, for the reasons explained by Fullerton J in Ghosh v Miller (No 2) [2016] NSWSC 713. The amount is a reasonable one, taking into account the very considerable amount of work Ms Amato has performed. She has provided careful and comprehensive written submissions and had presented them ably. Taking into account the quality of her work, the sum sought in the gross sum costs order is modest.
4. Taking all of the above into account, I am satisfied that the sum in question is within reasonable parameters and, while I may not have confidence in the solicitor's for the defendant's ability to correctly add up the amount which they are owed, I have sufficient confidence, looking at the memoranda of fees for Ms Amato and the reasonable amounts charged by the solicitors having regard to the hourly rates, that the sums sought ($9,318.48) is an appropriate sum for a gross sum costs order.

Should a stay be granted pending payment of costs?

1. One of the difficulties a successful defendant faces in defamation proceedings is that while proceedings remain on foot, attempts to enforce the proceedings may be unsuccessful (see, for example, Stratton v Bowles (No 2) [2015] FCA 43 at [38]). In practical terms, unless a stay is granted, the defendant in these proceedings has little prospects of recovering the costs of the seven claims which have been struck out until the remaining claim is determined by the court.
2. Mr Rollinson submits that it is not prima facie vexatious or oppressive for the plaintiff to proceed on the fourth matter complained of while the costs in the other publications are unpaid. The plaintiff proposes to proceed on his cause of action in relation to the fourth matter complained of and has provided a draft amended statement of claim.
3. Unhappily, examination of the draft amended statement of claim proffered on this application suggests that the conduct of these proceedings will continue to be a long and drawn out procedure. The particulars of identification suffer from the same defects as those challenged successfully in the previous statement of claim and, when this was pointed out to Mr Rollinson, he acknowledged that further amendments would be necessary, and he was not in a position to seek leave to file the draft amended statement of claim in its present form. In addition, Ms Amato also drew to his attention a number of asserted defects in the pleading of the imputations. Given these problems, it would appear likely that the conduct of these proceedings in future will be attended by the same problems as have occurred in the past.
4. In Byrnes v John Fairfax Publications Pty Ltd [2006] NSWSC 251, the New South Wales Supreme Court granted an application for a stay in somewhat similar circumstances (at [33]-[36]): "[33] As an alternative for the security for costs sought, the defendant sought a stay of proceedings pending payment of the ACT costs. In pursuing this alternative application, senior counsel for the defendant invoked UCPR r 12.10. That rule is in the following terms: 12.10 Stay of further proceedings to secure costs of proceedings dismissed If: (a) as a consequence of the dismissal of proceedings, a party is liable to pay the costs of another party in relation to those proceedings, and (b) before payment of the costs, the party commences further proceedings against that other party on the same or substantially the same cause of action, or for the same or substantially the same relief, as that on or for which the former proceedings were commenced, the court may stay the further proceedings until those costs are paid and make such consequential orders as it thinks fit. [34] There are at least two reasons why this rule is inapplicable. In my opinion, "proceedings" referred to in subpara (a) must mean proceedings, if not in this court, at least in this jurisdiction. Secondly, the proceedings which were dismissed in the ACT were of a different kind, being an application for leave to commence a criminal prosecution. True it is that that application was based upon the publication which is the subject of proceedings numbered 20241 of 2003, but it can hardly be said that they were brought on "the same or substantially the same cause of action", or "for the same or substantially the same relief". [35] It is, however, open to the court to grant a stay under s 67 of the Civil Procedure Act 2005 until those costs are paid: see Philips Electronics v Matthews. [36] It seems to me that fairness dictates that the alternative order sought by the defendant (in prayer 3) ought to be made. That is, the proceedings ought to be stayed until such time as the plaintiff discharges the obligations constituted by the ACT orders. That is because the amount involved is less than that sought by the defendant by way of security."
5. This approach to such problems is apposite in the present case. Although the circumstances in Byrne were very different (in that fresh proceedings were commenced where the whole of the previous proceedings had been struck out), the principle is the same, namely that a plaintiff who had been substantially unsuccessful would have been able to commence and continue proceedings notwithstanding that lack of success, and where the defendant would be denied the costs which were the fruit of that victory.
6. The defendant's success in these proceedings to date had been very significant. The defendant should not be obliged to wait for payment of the costs in question until the litigation is over, nor should the defendant be put to the trouble and expense of enforcement proceedings which are certain to be met with an application for a stay by reason of the remaining matter complained of. In those circumstances, I propose to make an order for the plaintiff's proceedings to be stayed until such time as the amount the subject of the gross sum costs order is paid.
7. As I am unsure of the plaintiff's financial position, I have placed these proceedings in the Inactive List, a step available for proceedings the subject of stay orders of this kind. The parties may make application at any time to restore the proceedings to the Defamation List.

Interest on costs

1. In the course of the hearing, I enquired whether there would be an application for interest on costs. Although Ms Amato considered, but ultimately abandoned, such application, I set out below the relevant provisions, with thanks to Mr Rollinson for pointing them out, as the provisions of s 101 subs (4) and (5) Civil Procedure Act 2005 (NSW) are far from clear unless careful attention is made to the transitional provisions of the Courts and Other Justice Portfolio Legislation Amendment Act 2015 (NSW).
2. Prior to 24 November 2015, s 101 subs (4) and (5) Civil Procedure Act 2005 (NSW) provided: "(4) The court may order that interest is to be paid on any amount payable under an order for the payment of costs. (5) Interest under subsection (4) is to be calculated, at the prescribed rate or at such other rate as the court may order, as from: (a) the date or dates on which the costs concerned were paid, or (b) such later date as the court may order."
3. By reason of Courts and Other Justice Portfolio Legislation Amendment Act 2015 (NSW), which came into operation on 24 November 2015, s 101 subs (4) and (5) were amended as follows: "(4) Unless the court orders otherwise, interest is payable on an amount payable under an order for the payment of costs. (5) Interest on an amount payable under an order for the payment of costs is to be calculated, at the prescribed rate or at any other rate that the court orders, as from the date the order was made or any other date that the court orders."
4. The savings provisions, which is now incorporated into Schedule 6 Civil Procedure Act, at s 21 provides: "Part 8 - Provisions consequent on enactment of Courts and Other Justice Portfolio Legislation Amendment Act 2015 21 Pending proceedings The amendments made to this Act by Schedule 1.2 to the Courts and Other Justice Portfolio Legislation Amendment Act 2015 do not extend to proceedings commenced before the commencement of that Subschedule and those proceedings may continue as if those amendments had not been enacted."
5. As these proceedings were commenced prior to 24 November 2015, the previous regime for costs will apply. In other words, the defendant would be entitled to seek costs if so desired, but interest on costs would not be the default position, as is the case under the amendments to s 101 Civil Procedure Act 2005 (NSW).

Orders 1. The plaintiff pay the defendant the sum of $9,318.48 by way of gross sum costs order in relation to the costs of the seven claims for defamation struck out or abandoned in these proceedings. 2. Pursuant to s 67 Civil Procedure Act 2005 (NSW) these proceedings stayed until payment of the said sum. 3. These proceedings placed in the Inactive List with a callover date of 8 December 2016, with liberty to restore on seven days' notice in the event that either party seeks further orders.

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: 06 September 2016