B1 v B2

Reasons for discharging the order

1. The circumstances in which I granted the plaintiff's application for a freezing order in relation to the proceeds of sale of the defendant's sole asset value, a property situated at Saratoga, New South Wales, are set out in my previous judgement B1 v B2 (No. 3) [2018] NSWDC 108. My reasons for doing so included a finding that there was a likelihood that the assets, the subject of the freezing order, would not otherwise be preserved. In addition, the defendant conceded that the plaintiff had a good arguable case (Samimi v Seyedabadi; Seyedabadi v Samimi [2013] NSWCA 279 at [69]).
2. The defendant no longer makes this concession. To the contrary, Mr Loukas points to s 42 of the Defamation Act 2005 (NSW) and submits that the plaintiff's case, particularly on a civil onus basis, is better described as hopeless.
3. There are also changes to the circumstances due to the effluxion of time. While a variation to these orders was made in B1 v B2 (No. 5) [2019] NSWDC 240 by reason of expenses for the children which were continuing over a longer period than had been anticipated, the freezing orders have remained in place for over two years.
4. Mr Lewis points to the obtaining of a merits advice on 27 November 2020 where Specialist Senior Counsel is drafting an application for special leave to appeal to the High Court. He relies upon the affidavit of his instructing solicitor, which sets out that the special leave application is expected to be filed before the end of the year. He submits, despite the absence of this document, that his client's prospects of success on appeal are substantial and that the requirement for a good arguable case is still satisfied.
5. Mr Lewis also points to the absence of any affidavit material concerning any change of circumstances since the freezing order was first made and in particular that a timetable for any such material to be filed was not complied with by the defendant. There is no evidence of any change in circumstances at all.
6. Both parties acknowledge that the question of whether there is a good arguable case requires careful attention to the Court of Criminal Appeal's careful analysis of the facts in the case.

The Court of Criminal Appeal judgment

1. The nature of the appeal may be summarised as follows: 1. Ground 1 alleged that the trial miscarried because the prosecutor, in her closing address, used evidence led by him of his good character. 2. Ground 2 alleged miscarriage on the grounds of inadequacy of directions as to the prohibited use of evidence called in rebuttal of good character and as to the nature and extent of good character evidence called at the trial. 3. Ground 3 alleged that the convictions on each of the 11 counts was unreasonable.
2. Each member of the bench gave detailed reasons for the rejection of these grounds. The principal reasons given for rejecting Ground 1 are set out in the judgment of N Adams J. In relation to the convictions on each of the 11 counts, the incident-by-incident analysis given by R A Hulme J is of particular relevance to this application.
3. The difficulty the plaintiff faces is that, unless he is successful in relation to Ground 3, at best all he will obtain is a fresh trial. Even if he is successful in relation to Ground 3 and the convictions are quashed, that is not a conclusive answer to the requirement for a good arguable case, as the onus in the defamation proceedings is a civil onus (although I note the impact of s 140 of the Evidence Act 1995 (NSW).
4. I will not set out in detail the findings of fact in relation to Ground 3 but, having regard to each of these individually as well as in totality, I am satisfied that the plaintiff cannot establish that he has a good arguable case. On the civil onus, the case against the plaintiff is very strong.

Discretionary factors

1. Mr Lewis submits that there has been no change in circumstances, and that a delay of a few more months will not make any difference. He also points to the findings adverse to the defendant's credit made in earlier judgments.
2. In the absence of an arguable case, the defendant does not have to establish fresh grounds of hardship. The sheer effluxion of time is of itself a relevant factor. Although Mr Lewis argues that the freezing order was intended to remain in place until a trial, it was an order of a "until further order" kind, and not one with a definitive terminating date. Freezing orders are by their nature intended to be a temporary form of relief. It is undesirable for a woman in the defendant's circumstances to have her only asset of substance the subject of a freezing order for a long period of time, especially where the court has determined that the party seeking the order no longer has an arguable case.
3. The delays in terms of the conduct of these proceedings in the High Court will add to this burden. The special leave application is not before me and, while I am prepared to assume that it will be filed promptly and that no point will be taken about it being filed out of time, the likelihood is, in the present difficult climate resulting from the pandemic, that disposition of that application to take a further 6 to 8 months.
4. While I accept that there has been no alteration to the defendant's financial circumstances, I consider I should also take into account that these are times of great economic uncertainty for everyone. The fact that the defendant is actively seeking work by offering services on the Internet in relation to counselling is not an indication that her financial position has improved; even if it were, I do not consider that this constitutes a factor going against the making of such an order. Nor do I consider that I should take into account the fact that the plaintiff has lost his employment by reason of being imprisoned for the purpose of serving the sentence affirmed on appeal by the Court of Criminal Appeal.
5. Taking all of the above into account, I proposed to discharge the freezing order made on 26 April 2018.
6. I was not addressed by Mr Loukas as to the orders he seeks for the release of the funds in question. I grant leave to the parties to bring in Short Minutes of Order setting out those steps necessary for the funds to be returned to the defendant.

The defendant's application for costs

1. In relation to the freezing orders, the defendant brings an application for costs payable forthwith, on an indemnity basis, and by way of a gross sum costs order.
2. Costs follow the event: Uniform Civil Procedure Rules ("UCPR") r 42.1. However, while the defendant has arguably been successful in this application, Mr Lewis points out that she was not successful in the earlier applications. What costs order, if any, should be made by way of variation of the costs orders previously made (which essentially merely reserved the costs), should such costs orders be made partly or wholly on an indemnity basis, and should the costs be assessable forthwith?

Indemnity costs

1. Mr Loukas' submissions did not specifically identify the basis upon which indemnity costs was sought, but he made it clear, in his oral submissions, that the plaintiff's guilt in relation to the criminal charges and what he termed the dilatory conduct of the application for leave to the High Court amounted to contumelious conduct. His argument in this application is to seek more time until the High Court deals with this application, which is not an unreasonable position warranting indemnity costs orders.
2. The plaintiff was successful in the previous applications and there was a concession by the defendant of a good arguable case. The defendant has at all times been frank in terms of agreeing that once the appeal process is exhausted, he would drop these proceedings if he is unsuccessful. He has complied with timetables and conducted these proceedings, including the applications for freezing orders, appropriately. That has included accommodating material supplied for the purpose of this application which was filed very late.
3. On the material put before me, there is no basis for the making of costs orders in relation to this application on an indemnity basis.

Costs in interlocutory applications and "payable forthwith"

1. Courts determining interlocutory applications commonly make orders that costs are "in the cause" or "the plaintiff's/defendant's costs in the cause" in order to ensure that the merits of the proceedings are a prevailing factor in determining where the cost of the proceedings should lie. Where it is appropriate for a costs order to be made in one party or the other party's favour, costs orders may also be made in favour of the party who has enjoyed success on the application. However, the general rule is that such costs cannot be enforced until the parties become entitled to judgement at the conclusion of the proceedings. For this reason, UCPR r 42.7 provides:
2. Interlocutory applications and reserved costs (1) Unless the court orders otherwise, the costs of any application or other step in any proceedings, including-- (a) costs that are reserved, and (b) costs in respect of any such application or step in respect of which no order as to costs is made, are to be paid and otherwise dealt with in the same way as the general costs of the proceedings. (2) Unless the court orders otherwise, costs referred to in subrule (1) do not become payable until the conclusion of the proceedings.
3. The costs power in s 98 of the Civil Procedure Act 2005 (NSW) permits the court to make costs orders at any stage of the proceedings notwithstanding the postponement contained in UCPR r. 42.7. This includes interlocutory costs orders: Petar v The Macedonian Orthodox community Church St Petka Pty Ltd [2007] NSWCA 142.
4. The circumstances in which costs will be payable forthwith, instead of at the end of the matter, have been explained in a series of decisions of the New South Wales Court of Appeal. Broadly speaking, such orders are made in cases where the interlocutory proceedings relate to matters distinct from the substantive issues (Wentworth v Wentworth, New South Wales Court of Appeal, 21 February 1996), where unreasonable conduct has occurred (Fiduciary Pty Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1), where costs may long be postponed because of the stage of proceedings, and/or where there is disparity between the parties' ability to bear ongoing costs.
5. Mr Loukos did not address UCPR r 42.7 in his submissions.
6. Mr Lewis draws to my attention the circumstances in which the freezing order was made, my findings as to the likelihood that the assets would be dissipated and the absence of any information about the defendant's current financial position. He submits that his client had compelling reasons to bring the application for freezing orders and that, but for the proceedings in the criminal jurisdiction of this court, the likelihood is that those orders would remain on foot.
7. As to the merits of the case, Mr Lewis reminds me that the matters complained of were not complaints to the police or any other relevant authority, but Facebook posts made before any criminal charges were laid, in circumstances where his client denied that he had committed any of the conduct alleged. He also reminds me that his client's position has always been that if he is denied leave by the High Court, he will not proceed further with these defamation proceedings and in those circumstances the likelihood of the hearing being long postponed (Fiduciary Pty Ltd v Morningstar research Pty Ltd (2002) 55 NSWLR 1) is not a matter for concern.
8. Looking at the list of factors relevant for the purposes of UCPR r. 42.7, the best course forward is to reserve these costs pending the hearing of the plaintiff's application for leave to the High Court. These proceedings may remain in the Inactive List until that issue is determined, and the issue of costs can be revisited once it is clear whether the proceedings will go ahead or not.
9. In taking this step I have taken into account Mr Lewis's submission that there is no evidence before the court of any imminent hardship or indeed any change to the defendant's financial position, beyond the fact that she is seeking work on the Internet. If the defendant had put evidence before the court of increased financial difficulty, I may well have taken a different course.
10. The defendant's application for a gross sum costs order gives rise to a number of other issues of some difficulty. I set out below my reasons for refusing to make the orders sought by the defendant.

Should a gross sum costs order be made?

1. A court can make an order under s 98(4) of the Civil Procedure Act for a gross sum costs order at any time before costs are referred for assessment. Such applications are generally made where the facts of the case are complex, where there has been misconduct by a party or where, based on prior experience, any further costs assessment is likely to be unduly protracted and add to costs unnecessarily.
2. It is essential, where an application for a gross sum costs order is made, for the court to be satisfied that it has sufficient costs information to be confident that the sum assessed is reasonable. A degree of particularity about the manner in which the total costs have been calculated is necessary as, in the absence of a proper basis for informed determination of the appropriate costs amount, a court should refuse the application: SAB Closed 1 Pty Ltd v Bees and Honey Pty Ltd [2015] NSWSC 1162; Riva NSW Pty Ltd v Mark A Fraser and Christopher P Clancy trading as Fraser Clancy Lawyers (No 4) [2018] NSWCA 327.

Are there factors warranting the making of a gross sum costs order?

1. The factors pointed to by Mr Loukas are: 1. The plaintiff is impecunious and in jail. He has applied for legal aid. There is an inference to be drawn that he does not have the means to pay a costs order. 2. The additional costs of formal assessment would disadvantage the successful party. 3. Since the decision of the Court of Criminal Appeal on 24 June 2020, the plaintiff has not been able to inform the court as to the basis of the merit advice he has received from senior counsel or the nature of his proposed challenge to the Court of Appeal's decision. The Special Leave Application has yet to be filed. In those circumstances, I should look closely at his conduct and as to whether he is unnecessarily contributing to the cost of the proceedings and wasting the costs of the ultimately successful party.
2. Mr Lewis relies upon McLaughlin v Browne (No 9) [2019] NSWSC 10 and submits that, where criminal proceedings intersect with defamation, courts have generally proceeded with caution. The plaintiff promptly took steps to seek special leave, as the affidavits filed on his behalf demonstrate. The plaintiff was denied legal aid and no reliance should be placed upon his having applied for it as evidence of impecuniosity. In addition, Mr Lewis relied upon the general reluctance of courts to make gross sum costs orders or indeed any form of costs order payable forthwith in defamation proceedings where the complexity of the pleadings and subject matter can overshadow the merits of the case.
3. Mr Lewis also pointed to the unsatisfactory evidence as to quantum, a submission with which I have dealt in more detail below.
4. There are no special factors in these proceedings warranting departure from the general procedure of costs being assessed in the usual way. However, even if there were, I would be wholly unable to make such an order by reason of the unsatisfactory and inconsistent documentation put before the court as to the costs claimed.

Is the cost information supplied sufficiently reliable?

1. The following defects in the documentary material should be noted: 1. Although the defendant's solicitor has sworn an affidavit of 1 December 2020 attaching solicitors' memoranda of fees totalling $92,820 inclusive of GST, it is unclear whether this sum (which relates to the whole of the proceedings to date) is claimed in whole or in part as to the freezing order, as Mr Loukas's submissions only seek payment of Counsel's fees. How this substantial total was arrived at when the defendant was acting for herself for long periods of time or retaining counsel by direct access (such as all of 2020) is unexplained. The affidavit was provided only a day before the hearing of this application. 2. As set out in more detail below, the sums sought for counsel fees vary significantly and the basis for the costs sought (whether for the freezing order or the whole of the proceedings) is unclear. 3. The desirability of making a gross sum costs order now for counsel fees only (leaving the solicitors' fees to be dealt with at some later date), is unexplained.
2. The first difficulty is the inconsistency in the sums sought. The defendant's submissions of 20 July 2020 stated: "The defendant seeks a gross sum costs order of $185,000 inclusive of GST, from the commencement of litigation, up to and including the hearing of these matters on 30 July 2020. The defendant submits that this is a reasonable amount given the length of time and the number of interlocutory applications and the level of preparedness for trial. It is submitted that if costs were assessed the figure would be significantly higher."
3. On 10 August 2020, Mr Loukas made the following additional submissions: "On the dismissal of the proceedings the plaintiff should pay the defendant's costs. In her affidavit dated 9 May 2020 (at 5(d)) the defendant stated that as at that time her costs were approximately $150,000. Since that time the plaintiff [sic] has received an additional invoice from Lawhouse Solicitors and from Danielle Woods, barrister. Additionally, the defendant has since 24 June 2020, retained the services of the writer, as counsel at a rate of $4000 per day, or part thereof."
4. Copies of tax invoices adding up to $170,820.00 were attached, as a Calderbank offer seeking a discontinuance of the proceedings on the basis that each party pay their own costs. Relying upon this documentation, Mr Loukas submitted that it was "most logical, fair and reasonable" that this sum be paid in full.
5. In further submissions dated 2 December 2020, Mr Loukas acknowledged that only costs associated with the discharging of the freezing order were being sought, as "the entire proceedings … have not been concluded". He stated: "The defendant invites the court to accept that there is difficulty in determining with any degree of precision the exact amount of costs attributable to the discharge of the freezing order. However, it is submitted that the invoices provided by Counsel - Ms Danielle Woods and Mr Bill Loukas - since approximately May 2018 are primarily concerned with this issue."
6. To this effect, the defendant relied on the affidavits she swore on 23 April 2020 and 9 May 2020. Although the costs of the solicitor who acted in the proceedings until early 2020 were not sought, there was also reliance upon an affidavit she swore on 1 December 2020 for the purpose of this application. The circumstances of making a Calderbank offer and a more recent offer, both in relation to settlement of the whole proceedings, were also relied upon (written submissions, paragraphs 6 - 9) as was an earlier offer at the commencement of proceedings.
7. Mr Loukas acknowledged the practice of granting discounts against the contingencies of costs assessment, but submitted that where an order for indemnity costs was made, such a discount was not mandatory and may be inappropriate (Hancock v Rinehart [2015] NSWSC 1640). He submitted that either no discount should be made or that it should be lower than the discount typically made.
8. Doing the best I can, the claim for the entire proceedings to date appears to be $178,520, consisting of $90,820 in professional fees and $87,700 for Counsel. The hourly rates for the solicitor and junior counsel are asserted to be "well within the guidelines", although those guidelines are not identified. Mr Loukas submitted that the time as charged was "modest" and that the work had been undertaken in an "efficient and reasonable" manner
9. Mr Loukas's written submissions of 2 December 2020 concluded as follows: "For the reasons expressed in these submissions, the defendant contends that they [sic] are entitled to indemnity costs and/or a gross sum costs order in the sum of $178,520 for the entire proceedings to date. However, as we are presently concerned with the issue of the freezing order, the defendant submits that the court should accept that the following tax invoices are predominantly or wholly concerned with the issue of the freezing order and its discharge."
10. There then follows a list of seven memoranda of fees from Counsel, totalling $59,647.50 which appears to be the sum finally arrived at as the one for which orders are sought.
11. Mr Loukas submitted that it was standard practice for costs assessors not to reduce counsel's fees, particularly if the costs were assessed on an indemnity basis, and repeated his written submission that indemnity costs should run from 6 November 2017, which was the date of the first Calderbank offer. Accordingly, no discount should be made.
12. However, the defendant swore an affidavit on 9 May 2020 in which she stated: "During the course of these defamation proceedings, I have been required to pay significant legal fees (fees to date approximately $150,000) to defend these proceedings, including an additional $250,000 frozen."
13. In his written submissions of 27 July 2020, Mr Lewis points to the discrepancy between the $180,000 estimate in July and this much larger figure.
14. I also note the defendant swore an affidavit on 26 November 2019 in which she stated: "… I have paid a total of $83,175.50 to my solicitors to defend these proceedings to date. Some of the invoices have been part paid and will be fully paid at the conclusion of these proceedings. Outstanding to date is a sum of $31,410.50. Annexed and marked with the letter D is a copy of the schedule of costs prepared by my solicitor."
15. Schedule D sets out two 2017 bills from Mr Lucas for $6000 and $11,000, three 2018 bills from Ms Woods for $1980, $6600 and $2887.50 and five bills from Lawhouse. The first is for work to 29 March 2018 ($12,820) and the remaining four are for work in 2018 and 2019 ($14,688, $44,000, $8510 and "$5500 not yet billed". The total amount is $114,585.50, of which $83,175.50 has, as is noted in the paragraph above, been paid.
16. Which sum is correct - the first claim of the much larger sum referred to by the defendant in her affidavit of 9 May 2020, or the second much lower figure she gave of $114,585.50, or the sums in between such as the $178,520.00 referred to in Kelly Durant's affidavit? How do the fees totalling $59,647.50 fir into these estimates?
17. It is instructive to compare the amounts sought with the amounts which troubled Leeming JA in Riva at [80] - [82]: "[80] Fourthly, the amounts are too high. Take the costs of the present application for special costs orders. Mr Clancy said that it had cost (up until 9 November 2018), no less than $41,776, to which should be added his estimate of counsel's fees of $3,850 and his own time of $7,260 making a total of $52,886. It is absurd to think that $52,886 could be spent on an application for indemnity costs and gross sum costs orders, where those orders themselves were in the order of $140,000. This is entirely in disregard of the proportionality required to be recognised by s 60 of the Civil Procedure Act. [81] The primary materials permit some precision in how the $41,776 is calculated (the balance is merely an estimate). The $41,776 represents the time recorded from 27 August 2018 until 8 November 2018 (which is the day preceding the execution of Mr Clancy's affidavit in support of the application for special costs orders) of $37,978.80, to which has been added 10% claimed for GST. Of the $37,978.80, all save $2,767.80 was time incurred by Mr Clancy personally, which is to say some 93% of all time on the application for special costs orders was the time of a partner, as opposed to the time of a more junior solicitor. It is unclear to me how much of the work should reasonably have been done by a more junior solicitor, but it is certainly substantially more than 7%. Further, the time sheets record Mr Clancy as having personally spent some 64 hours working on the application for special costs orders. Fraser Clancy is right to say that Riva has tendered no evidence to the effect that this was excessive or unreasonable. No evidence is required. Sixty-four hours to generate a notice of motion, supporting affidavit and submissions in support of special costs orders is, with respect, absurdly excessive given the nature of the application. [82] This Court refused a gross-sum costs order in South Western Sydney Local Health District v Gould (No 2) [2018] NSWCA 160. Once again, it did so because there was insufficient information, and, to be fair, Fraser Clancy has adduced considerably more information than occurred in that case. The Court refused the application for $90,000, which was said to reflect "slightly more than 60% of the appellant's actual costs and disbursements incurred at first instance". My view that Fraser Clancy's costs are an order of magnitude too high is reinforced by that medical negligence case. There had been a five day trial, with lay and expert testimony, and a series of substantial submissions after judgment was reserved. The contrast is with two short interlocutory applications."
18. Leeming JA refused to make the orders sought where the costs (which are smaller than those sought here) appeared disproportionate to the work done.
19. The applications in these proceedings were similarly short interlocutory applications. The initial orders were made ex parte, the issues thereafter related to discharge and/or variation and for costs. As for the costs applications, as noted above, most of the relevant material was put together at the last minute in circumstances where the earlier documents and submissions were inadequate.
20. There is also a gap between the sums sought and the work done, especially for work done in 2020. Examination of the court file reveals the defendant appeared on her own behalf between February and June 2020. The defendant's solicitor advised the court at the commencement of 2020 that the defendant was representing herself. Mr Loukas appeared on her behalf on 29 July and three subsequent occasions prior to the hearing of this matter on 3 December 2020. It is not clear to me whether this is a direct access brief or not. Whatever the basis, the principal difficulty over this period was, as Mr Lewis reminds me, the inadequacy of the written submissions and affidavit material in relation to the costs application. As the dates of Mr Loukas's submissions and Kelly Durant's affidavit demonstrate, these only became available the day before the hearing of this application.
21. Although Mr Loukas' submissions of 2 December 2020 set out in some detail the basis upon which the gross sum costs order is sought, this was only done after my repeated indications that the submissions he had provided earlier to the Court failed to have regard to the kind of requirements identified in Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 at [9]. In his written submissions of 27 July 2020 at paragraph 27, Mr Lewis made this point, as well as raising the discrepancies between the sums claimed and paid, and he repeated these points in relation to each iteration of the defendant's application for costs. The submissions have all the more force since there is no attempt to break down the costs as the bill is the subject of a claim into work carried out in relation to the freezing order.
22. Given the inconsistencies in the amounts claimed, I can have no confidence in the quantum of the claim where there is such a discrepancy between the amounts claimed and the amounts the defendant gives.
23. Accordingly, if I had been prepared to make a gross sum costs order by reason of the defendant satisfying the necessary criteria, I could not have done so by reason of the unreliability of the quantum claimed, having regard to the feature set out above.

Orders 1. Orders 1 to 7 of my orders dated 26 April 2018 set aside. 2. The parties have liberty to bring in short minutes of order reflecting the necessary procedural steps for the sum the subject of the freezing orders dated 26 April 2018 to be returned to the defendant. 3. The defendant's application for gross sum costs orders payable forthwith (both in relation to these proceedings and in relation to the freezing orders) is dismissed. 4. Costs of this application reserved. 5. These proceedings to remain in the inactive list with a review date of 30 March 2021.

Amendments 18 August 2021 - Cover Sheet 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: 18 August 2021