Beau Timothy John Hartnett trading as Hartnett Lawyers v Anthony Robert Bell as Executor of the Estate of the late Mabel Dawn Deakin-Bell

Beau Timothy John Hartnett trading as Hartnett Lawyers v Anthony Robert Bell as Executor of the Estate of the late Mabel Dawn Deakin-Bell - [2023] NSWCA 311 - NSWCA 2023 case summary — Zoe

HEADNOTE [This headnote is not to be read as part of the judgment] On 12 October 2023, the Court dismissed the appeals brought by Beau Hartnett trading as Hartnett Lawyers (the appellant) against Mr Anthony Robert Bell as executor of the estate of the late Mabel Deakin-Bell (the respondent) and ordered the appellant to pay the costs of the respondent. By notice of motion filed on 2 November 2023, 21 days after entry of the original order, Mr Bell seeks orders including an order that his costs of the appeal be paid in a gross sum pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW). On 13 October 2023, Mr Bell's solicitors sent an email to Mr Hartnett asserting that Mr Hartnett was required to pay the judgment sum of $311,356.47 within 28 days. On 16 October 2023, Mr Bell's solicitor foreshadowed an application, in the absence of agreement, for the costs ordered to be fixed in a gross sum of $72,193.44. Difficulties were encountered by Mr Bell's solicitors between 20 October 2023 and 2 November 2023 filing the notice of motion in the Court's online registry since it was necessary that there be separate notices of motion and affidavits for each proceeding. It was not until 8 November 2023 that the Registry notified them that the documents had actually been filed on 2 November 2023. On the following day, Mr Bell's solicitors served Mr Hartnett with the notices of motion and affidavits. Mr Hartnett submitted that Mr Bell's application was a variation of the original order and that he was out of time for making such an application under r 36.13(3A) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR). It was further submitted that as Mr Hartnett had not been notified of the making of the application within the 14-day period, the Court ought not exercise its discretion to grant an extension of time. This application gave rise to the following questions which are the subject of conflicting authority: (a) Whether an application that costs be specified in a gross sum is an application to vary the original order or an application for a further order; and (b) whether s 98 of the Civil Procedure Act provides a statutory authorisation for the specifying of a gross sum which displaces r 36.26. The Court held (Bell CJ and Adamson JA) ordering the appellant to pay the respondent's costs in a gross sum: (1) An application for costs to be specified in a gross sum is not a variation of an order which would attract the operation of r 36.16 of the UCPR: [38]. Short v Crawley (No 45) [2013] NSWSC 1541, applied; Gabrielle v Abood (No 4) [2023] NSWCA 100, cited. Riva NSW Pty Ltd v Mark A Fraser and Christopher P Clancy t/as Fraser Clancy Lawyers (No 4) [2018] NSWCA 327, referred to. (2) There is a distinction between an application that costs be paid on an indemnity basis following an order that one party pay another party's costs and an application that costs, which have been ordered to be paid by one party to another party, be specified in a gross sum. The former is an application for a variation to an order which has been made since the effect of the order made is that costs are payable on the ordinary basis: UCPR, r 42.2. The latter category is not a variation of the basis on which costs are to be paid (ordinary or indemnity) but rather concerns how and by whom the costs are to be quantified. The implicit basis of costs orders is that the quantum of the costs is to be "as agreed or assessed". An application for costs to be specified in a gross sum is an application for the Court itself to determine the amount of the costs payable, rather than the parties (if they are agreed) or a costs assessor (if they are not agreed): [32]. (3) The construction of s 98 of the Civil Procedure Act tends to promote its purpose of providing a cheaper, quicker method of quantifying costs than is provided when costs are assessed and, as such, is to be preferred: s 33 of the Interpretation Act 1987 (NSW). It is reasonable to allow parties to proceedings (in respect of which a costs order has been made) some time to agree on a figure for the costs payable before a decision is made to apply for either an order that the costs be paid in a gross sum or an assessment of those costs. The availability of a process of quantification of costs which have been ordered to be paid which is quicker and cheaper than a costs assessment (which is yet to be undertaken) does not undermine the principal of finality: [36]. (4) Mr Bell does not require an extension of time to make the application that costs be specified in a gross sum pursuant to s 98(4)(c) of the Civil Procedure Act: [39]. (5) The Court is entitled to apply a broad-brush approach in assessing costs by reviewing the tax invoices of the solicitors and counsel and determining what is fair between the parties. The common practice of obtaining opinion evidence is not a requirement before an order fixing costs in a gross sum can be made: [48]. (6) The manner in which the litigation was conducted in the Court below, including the complexity of the pleadings, the number and duration of the interlocutory hearings and effort required for the preparation of the appeal makes it appropriate to fix the costs payable by Mr Hartnett in a gross sum: [49].

[4]

JUDGMENT

THE COURT: On 12 October 2023, this Court (Bell CJ, Adamson JA and Griffiths AJA) dismissed the appeals brought by Beau Hartnett trading as Hartnett Lawyers (Mr Hartnett) in proceedings 2022/299298 and 2022/299327: Beau Timothy John Hartnett trading as Hartnett Lawyers v Anthony Robert Bell as Executor of the Estate of the late Mabel Dawn Deakin-Bell [2023] NSWCA 244. It also ordered the appellant to pay the costs of the respondent, Anthony Bell as executor of the estate of the late Mabel Deakin-Bell (the original order). The original order was entered on 12 October 2023.
By notice of motion filed on 2 November 2023, 21 days after entry of the original order, Mr Bell seeks orders, including an order that his costs of the appeal be paid in a gross sum pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW).
Ms King, who appeared on behalf of Mr Hartnett, submitted that Mr Bell's application that the costs be specified in a gross sum was a variation of the original order and that he was out of time for making such an application under Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 36.16(3A). Further, she submitted that as Mr Hartnett had not been notified of the making of the application within the 14-day period, no extension of time ought be given.
Ms King initially submitted that, as Mr Bell's notice of motion was filed more than 14 days after the entry of the original order, the Court had no power to order that the costs be fixed in a gross sum. However, at the hearing of the motion, Ms King accepted that the Court had a discretion to extend time but that it ought not exercise its discretion in Mr Bell's favour since he had not notified Mr Hartnett of his application within the period of 14 days of the original order, being the time allowed by UCPR, r 36.16(3A). In addition, she submitted that the order ought not be made because there was "no meaningful evidence as to the amount which would be recoverable on assessment". These submissions will be addressed in turn.

[5]

The facts

On 13 October 2023, the day after the original order was made and entered, Mr Bell's solicitors sent an email to Mr Hartnett, attaching copies of this Court's orders of 12 October 2023 and the orders made by Peden J (the primary judge). They asserted that, as the proceedings were concluded, the stay of the primary judge's judgment no longer operated and that Mr Hartnett was required to pay the judgment sum of $311,356.47 within 28 days. They provided their bank account details for that purpose.
In an email sent on 16 October 2023, Mr Bell's solicitor foreshadowed an application, in the absence of agreement, for the costs ordered in the original order to be fixed in a gross sum of $72,193.44, comprising 65% of the solicitors professional fees and 100% of the disbursements, including counsel's fees. Mr Hartnett did not respond to this letter although he received and read the email on that day.
On 20 October 2023, Mr Bell's solicitors tried to file a notice of motion in the Court's online registry. However, difficulties were encountered with filing it online which led to the solicitors sending an email to the Registry, asking for a link which could be used for filing the notice of motion and supporting affidavit. This email was not copied to Mr Hartnett. When no response had been received from the Court by 26 October 2023, Mr Bell's solicitors emailed the Registry again (and included their earlier email of 20 October 2023), asking for an "update as to filing".
On 1 November 2023, the Registry informed Mr Bell's solicitors that the documents could not be accepted for filing in their current form since it was necessary that there be separate notices of motion and affidavits for each proceeding.
On 2 November 2023, Mr Bell's solicitors submitted the documents in the correct form for filing. It was not until 8 November 2023, that the Registry notified them that the documents had actually been filed on 2 November 2023. On the following day, 9 November 2023, Mr Bell's solicitors served Mr Hartnett with the notices of motion and affidavits and confirmed as follows: "Please note that although there are two motions, as directed by the COA registry, the orders are identical and we are only seeking one order for both matters."
These facts pertain to Mr Hartnett's submission that Mr Bell's application is out of time. Further facts are set out later in this judgment, which are relevant to the additional orders sought by Mr Bell.

[6]

Consideration

Mr Bell invokes this Court's power under s 98(4)(c) of the Civil Procedure Act to specify costs in a gross sum rather than assessed costs. Section 98 relevantly provides: "98 Courts powers as to costs … (3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings. (4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to - … (c) a specified gross sum instead of assessed costs, …"
As referred to above, Mr Hartnett relied on UCPR, r 36.16, which relevantly provides: "36.16 Further power to set aside or vary judgment or order (1) The court may set aside or vary a judgment or order if notice of motion for the setting aside or variation is filed before entry of the judgment or order. (2) The court may set aside or vary a judgment or order after it has been entered if-- (a) it is a default judgment (other than a default judgment given in open court), or (b) it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order, or (c) in the case of proceedings for possession of land, it has been given or made in the absence of a person whom the court has ordered to be added as a defendant, whether or not the absent person had notice of the relevant hearing or of the application for the judgment or order. (3) In addition to its powers under subrules (1) and (2), the court may set aside or vary any judgment or order except so far as it-- (a) determines any claim for relief, or determines any question (whether of fact or law or both) arising on any claim for relief, or (b) dismisses proceedings, or dismisses proceedings so far as concerns the whole or any part of any claim for relief. (3A) If notice of motion for the setting aside or variation of a judgment or order is filed within 14 days after the judgment or order is entered, the court may determine the matter, and (if appropriate) set aside or vary the judgment or order under subrule (1), as if the judgment or order had not been entered. (3B) Within 14 days after a judgment or order is entered, the court may of its own motion set aside or vary the judgment or order as if the judgment or order had not been entered. (3C) Despite rule 1.12, the court may not extend the time limited by subrule (3A) …. (4) Nothing in this rule affects any other power of the court to set aside or vary a judgment or order." [Emphasis added.]
Whether r 36.16(3A), and, accordingly, r 36.16(3C), apply turns on whether an application that costs already ordered be fixed in a gross sum constitutes a "variation" of the original order. Ms King submitted that it did and that, accordingly, the application had to be made within 14 days, as specified in r 36.16(3B). As referred to above, she ultimately accepted that this Court had power under s 14 of the Civil Procedure Act to extend time for making an application for a variation (r 1.12 having been expressly excluded by r 36.16(3C)).
Section 14 provides: "Court may dispense with rules in particular cases In relation to particular civil proceedings, the court may, by order, dispense with any requirement of rules of court if satisfied that it is appropriate to do so in the circumstances of the case."
However, Ms King submitted that the authorities establish that the power in s 14 should only be exercised to dispense with the 14-day time period in r 36.16(3A) in circumstances where notice of intention to make such an application has been given during the 14-day period. She relied on the authorities referred to in Foundas v Arambatzis (No 5) (2022) 109 NSWLR 73; [2022] NSWCA 113 (which did not concern an application that costs be specified in a gross sum) at [19] (White JA, Bell CJ and Basten AJA agreeing) in support of such a limitation.
Ms King also relied on State of New South Wales v Hollingsworth (No 2) [2023] NSWCA 283 (Hollingsworth) in which Mr Hollingsworth made an application to vary costs orders including by varying an order that he pay the costs of the State of New South Wales and, instead making an order that costs be costs in the cause. This application was made within the 14-day period specified in r 36.16(3A). However, a further application was made outside the 14-day period. The Court held that the first application could be entertained but that the second application ought not be. Although the Court did not finally determine the question whether the power in s 14 could be used to extend the time stipulated in r 36.16(3A), it cited dicta to the effect that the power to extend time was limited to applications which had been made or indicated (to the Court) within the 14-day period since otherwise there would be an unlimited power in the Court to vary orders which had been entered. Such a result was considered to be inimical to the principle of finality of litigation. The effect of these provisions on an application that costs be specified in a gross sum did not arise in Hollingsworth.
Ms King's concession that the Court has a discretion to extend time and her acceptance that Mr Hartnett had suffered no prejudice as a consequence of the delay (such as it was) are significant. The reasons for extending time in the present case are persuasive, as the chronology set out above demonstrates. A mere four days after the making of the original order, Mr Bell foreshadowed an application for costs to be specified in a gross sum and set out the amount sought. But for a technical issue with filing, the notices of motion would have been filed on 20 November 2023, eight days after the original order. The day after Mr Bell's solicitors were notified that the documents had been accepted for filing, the documents were served on Mr Hartnett.
The only matter raised by Ms King against the granting of an extension was that Mr Hartnett had not been notified of the making of the application within 14 days of the original order. In circumstances where the making of the application had been expressly foreshadowed on 16 October 2023, we do not regard this matter as being of any consequence. It is insufficient to outweigh what we regard as the compelling reasons, in the interests of justice, to grant an extension for the filing of the notices of motion to 2 November 2023, if such an extension be required.
We turn now to address the question whether an extension of time is required.

[8]

The approach endorsed in Short v Crawley

In Short v Crawley (No 45) [2013] NSWSC 1541 (Short v Crawley), White J (as his Honour then was) said, after hearing oral argument and reserving his decision, that if an application for costs to be fixed in a gross sum was a variation, the relevant power was r 36.16(3).
His Honour said: "16 Each of subrules 36.16(1), (2), (3), (3A) and (3B) confers power on the court to vary or set aside its orders. Subrule (1) confers such a power if the notice of motion is filed before the order is entered. Subrules (3A) and (3B) in substance extend that time by 14 days. That period cannot be further extended (subrule (3C)). Subrule (2) confers additional powers to vary or set aside an order if it is a default judgment, or was made in the absence of a party. Subrule (3) also confers power to vary or set aside an order. It applies to the varying or setting aside of any order, whether entered or not, except so far as the order determines a claim for relief, or determines any question arising on a claim for relief, or dismisses the proceedings, or dismisses a claim for relief. The words 'except so far as' in subrule (3) are important. They do not mean 'unless'. That is to say, it is only so far as an order determines a claim for relief, or a question on such a claim, or dismisses a proceeding, or a claim in a proceeding, that the power to vary the order is excluded. 17 If the claim for relief sought to be raised has not been determined and the proceeding has not been dismissed, then it is not an objection to the court's power to determine the claim for that relief, that the granting of the relief would involve the setting aside or variation of an earlier order. Nor would it matter whether the application was made within 14 days of entry of the order sought to be varied. That is because the power of variation invoked would not be the power under r 36.16(1) as extended by r 36.16(3A), but the separate power under r 36.16(3)."
His Honour reasoned that as there had been no determination of the plaintiff's claim for costs to be fixed in a gross sum, r 36.16(3) was applicable.
In Short v Crawley, White J also held, at [22] that the statutory power in s 98(3) expressly authorised the Court to make costs orders "after the conclusion of the proceedings" and, (at [30]), to that extent, expressed a contrary statutory intention to the principle of finality of judgments. His Honour followed the approach taken by von Doussa J in Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 120 regarding Order 62, rr 3 and 4 of the Federal Court Rules 1979 (Cth) (which were in similar terms to s 98(3) and (4) of the Civil Procedure Act). At [30], White J cited with approval the following statement of von Doussa J at 120: "Pursuant to O 62, r 3(1) the Court may exercise its powers and discretions as to costs at any stage of the proceedings, or after the conclusion of the proceedings. In my opinion the Court has power to make a gross sum order at this stage notwithstanding that costs orders were earlier made which envisaged taxation in the ordinary way."
At [28], White J explained why fixing costs in a gross sum would not "vary" the costs order except to the limited extent that it provided a different mode of assessment. His Honour said: "I accept that in the costs orders the reference to costs being assessed on the ordinary basis is to their being assessed in the way provided for by Pt 3.2 of the Legal Profession Act 2004, that is, by an assessment by a costs assessor to whom the assessment is referred by the Manager, Costs Assessment. The position is the same for the other costs orders (leaving aside the indemnity costs order) which do not expressly refer to the payment of costs 'as assessed on the ordinary basis or agreed'. Pursuant to r 42.2 those costs are to be assessed on the ordinary basis. If the Court were to make a gross sum costs order pursuant to s 98(4) the order would be made for the payment of a gross sum 'instead of' assessed costs. Necessarily therefore some variation would be made to the existing costs orders. However, in making a gross sum costs order a court endeavours within the constraints of a summary procedure not involving a detailed assessment to make a logical, fair and reasonable estimate of what sum is payable under the costs order (Harrison v Schipp [2002] NSWCA 213; (2002) 54 NSWLR 738 at [22]). That is, the making of a gross sum costs order would provide a different mode of assessment than provided for by the existing orders, but would not otherwise vary the orders. It would not involve a variation of the claim for costs that was determined by the costs orders that were made." [Emphasis added.]
White J followed this approach in his subsequent decisions in Livers v Legal Services Commissioner (No 2) [2021] NSWCA 164 at [5]-[8] (White JA) and Eliezer v The Council of St Andrew's Cathedral School (No 2) [2021] NSWCA 227 at [44]-[45] (White JA) (Eliezer (No 2)). In Eliezer (No 2), the successful party notified the Court informally within the 14-day period of the intention to seek specification of the costs as a gross sum although the formal application was not filed within the 14-day period.

[9]

The dicta in Riva

A different view was expressed by Leeming JA in Riva NSW Pty Ltd v Mark A Fraser and Christopher P Clancy t/as Fraser Clancy Lawyers (No 4) [2018] NSWCA 327 (Riva), on which Ms King relied.
In Riva, the question arose whether an application for indemnity costs and an application for the costs to be fixed in a gross sum were "variations" of existing orders such as to attract the operation of UCPR, r 36.16. This matter was dealt with on the papers without a hearing. In their written submissions, the parties in Riva referred neither to Beach Petroleum NL v Johnson (No 2) nor to Short v Crawley. Neither of these authorities was considered by Leeming JA in Riva.
Leeming JA said: "Fraser Clancy's application for gross sum and indemnity costs is an application to set aside or vary the existing costs orders 59 Fraser Clancy's letter contends that an order for a gross sum costs assessment is 'not seeking to set aside or vary any order', but rather 'is seeking a new order'. I disagree. The extant costs order made on 22 March and 17 August 2018 entitle a party to apply for assessment (ultimately, by filing an application which will come before a costs assessor who will determine, on the ordinary basis, an amount of party/party costs to which the firm is entitled). The order which is sought, namely, that Fraser Clancy's costs be paid on an indemnity basis would, if made, give rise to different rights as between the firm and Riva. The assessment would be determined on a different basis, and would yield a certificate in a different amount. The two orders (namely, that Riva pay Fraser Clancy's costs on an ordinary basis, and on an indemnity basis) are mutually inconsistent. It is quite plain that the application for an indemnity costs order is one to set aside or vary an existing costs order. 60 Aside from principle, a deal of authority is to the same effect: see for example AT v Commissioner of Police, NSW (No 2) [2010] NSWCA 337. Indeed, many occasions when parties have applied to vary or set aside orders have been cases where special costs orders have been sought. 61 The same is true, even more clearly, for the application for a gross-sum costs order. Such an order supplants the assessment regime, and permits a person to proceed to execution directly. Plainly that too is an application to set aside or vary an existing costs order." [Emphasis added to indicate the passage on which Ms King relied.]

[10]

Consideration

There is a distinction between an application that costs be paid on an indemnity basis following an order that one party pay another party's costs and an application that costs, which have been ordered to be paid by one party to another party, be specified in a gross sum. The former is an application for a variation to an order which has been made since the effect of the order made is that costs are payable on the ordinary basis: UCPR, r 42.2. The latter category is not a variation of the basis on which costs are to be paid (ordinary or indemnity) but rather concerns how and by whom the costs are to be quantified. The implicit basis of costs orders is that the quantum of the costs is to be "as agreed or assessed": see the references in UCPR, r 20.26 regarding offers of compromise; the definition of "ordinary basis" in s 3 of the Civil Procedure Act. An application for costs to be specified in a gross sum is an application for the Court itself to determine the amount of the costs payable, rather than the parties (if they are agreed) or a costs assessor (if they are not agreed).
In so far as Leeming JA considered that "[an] application for an indemnity costs order is one to set aside or vary an existing costs order," there is no inconsistency between Short v Crawley and Riva.
The only relevant inconsistency between Short v Crawley and Riva is that in Riva Leeming JA considered that an application for costs to be specified in a gross sum was in the same category as an application for indemnity costs: that is, that it was a variation of an order that one party pay the other's costs, implicitly on the ordinary basis. Indeed, his Honour held the 14-day time limit in r 36.16 (3A) applied and there was no power in the Court to extend it. Leeming JA did not address (and it would appear that no submission was made which raised it) the question whether s 98(3) and (4) of the Civil Procedure Act authorised the application to be made at any time before assessment of the costs.
In Ahern, it was not necessary for this Court to resolve the question as the application for costs to be fixed in a gross sum had been made within the 14 day period specified in r 36.16(3A). However, the Court in Ahern, at [21], approved the statement by White JA at [45] of Eliezer (No 2) that s 98(3) of the Civil Procedure Act "provides a statutory qualification to the rule as to finality of judgments to permit the making of an order 'as to costs' after the conclusion of proceedings".
This construction of s 98 of the Civil Procedure Act tends to promote its purpose of providing a cheaper, quicker method of quantifying costs than is provided when costs are assessed and, as such, is to be preferred: s 33 of the Interpretation Act 1987 (NSW). It is reasonable to allow parties to proceedings (in respect of which a costs order has been made) some time to agree on a figure for the costs payable before a decision is made to apply for either an order that the costs be paid in a gross sum or an assessment of those costs. As White JA has pointed out, the availability of a process of quantification of costs which have been ordered to be paid which is quicker and cheaper than a costs assessment (which is yet to be undertaken) does not undermine the principal of finality.
In these circumstances, we consider that s 98(3) and (4) empower this Court to entertain Mr Bell's application for costs to be fixed in a gross sum, notwithstanding that his application was made outside the 14-day time limit in r 36.16(3A).
Further, we agree with White JA's analysis that an application for costs to be specified in a gross sum is not a variation of an order which would attract the operation of r 36.16. This analysis is reflected in this Court's approach in Gabrielle v Abood (No 4) [2023] NSWCA 100, where this Court (Bell CJ, Kirk and Adamson JJA) said at [12] that it was not necessary for a costs order to be "varied" to specify that it be paid in a gross sum as the specification was an additional order (not a variation).
For these reasons, Mr Bell does not require an extension of time to make the application that costs be specified in a gross sum pursuant to s 98(4)(c) of the Civil Procedure Act.
In these circumstances, it is not necessary to determine whether s 14 empowers the Court to extend time beyond the 14-day period in UCPR, r 36.16(3A) and, if so, the extent of that power. Thus, further consideration of authorities such as Hollingsworth is not required.

[11]

Whether costs ought be fixed in a gross sum

In support of his application that costs be specified in a gross sum, Mr Bell relied on affidavits of Deborah Pickering, his solicitor, from the firm of McVittie Legal (McVittie Legal), affirmed 20 October 2023 and 6 December 2023. Exhibited to these affidavits are the cost agreement between Mr Bell and McVittie Legal, as well as the tax invoices rendered by McVittie Legal to Mr Bell and those rendered by Sam Sykes, counsel briefed on behalf of Mr Bell by Ms Pickering.
It is apparent from the evidence adduced by Mr Bell that Mr Sykes, who was admitted to the bar in 2015, charged $5,000 a day and $500 an hour (plus GST). The charge-out rate for Ms Pickering, who was admitted to practice in 2007, was also $500 an hour (plus GST). Mr Sykes was entitled to an uplift fee of 25% which reflected the circumstance that he was doing the legal work on the basis that he would not be paid if Mr Bell was not successful. The total counsel's fees amounted to $67,203.13, calculated as follows: Sub-total fees (before uplift) $48,875 Total including 25% uplift $61,093.75 Plus 10% GST $6,109.38 Total (including uplift and GST) $67,203.13
As Mr Bell does not seek that the 25% uplift be included in any gross sum awarded, the total of Mr Sykes' fees, including GST, is $53,762. In addition, Mr Bell seeks disbursements relating to his solicitor's travel to Sydney for the hearing of the appeal. The total disbursements claimed are $55,389.33.
The total solicitors costs billed by McVittie Legal amount to $27,963. Of these Mr Bell claims 65% ($18,176.51) for the purposes of fixing a gross sum.
In Gabrielle v Abood (No 4), this Court at [6] summarised the approach to be taken on an application for an order that costs be paid in a gross sum as follows: "The power to make a gross sum costs order provided by s 98(4)(c) of the Civil Procedure Act 2005 (NSW) is discretionary. Authority establishes that the discretion is not confined and may be exercised whenever the circumstances warrant its exercise; it should only be exercised when the Court considers that it can do so fairly between the parties, and that includes having sufficient confidence in arriving at an appropriate sum on the materials available; courts have typically applied a discount in assessing costs on a gross sum basis; and the court is not required to undertake a detailed examination of the kind that would be appropriate to taxation or formal costs assessment: see Hamod v New South Wales [2011] NSWCA 375 at [813]-[820] and authority there cited."
The principal purpose of such an order is to avoid the expense, delay and aggravation involved in a costs assessment process: Hamod v New South Wales [2011] NSWCA 375 at [816]-[817]. The making of an order also tends to further the fulfilment of the objective to ensure that the issues between the parties are resolved "in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute": Civil Procedure Act, s 60; see James v Australia and New Zealand Banking Group Ltd [2017] NSWCA 84 at [3] (Basten JA).
Typically, a discount is applied to the billed costs to ensure that the ultimate figure arrived at is fair to the person ordered to pay the costs. The level of the discount applied tends to be determined by reference to the detail in the invoices and the expert opinion of a solicitor or costs assessor as to the appropriate discount. For this reason, it is common in such applications for solicitors to opine as to what percentage of the billed costs would be likely to be recovered on assessment. In the present case, Ms Pickering has not expressed any view about the percentage claimed in such terms. Rather, Mr Sykes, in his written submissions, has indicated that Mr Bell claims 65% of the total of his solicitor's fees and 100% of the disbursements (which include counsel's fees).
The common practice of obtaining opinion evidence as to the percentage of a total which may be allowed on taxation is one way, but not the only way, of proving that the figure claimed ought be ordered. We reject Ms King's submission that such evidence is required before an order fixing costs in a gross sum can be made. The Court is entitled to apply a broad-brush approach by reviewing the tax invoices of the solicitors and counsel and determining what is fair between the parties.
The factors which militate in favour of making the order sought include that there may be difficulty in enforcing the costs order and that, accordingly, the additional costs occasioned by the costs assessment process will not be recovered. There is insufficient evidence to establish that there may be such difficulty in the present case. However, the appeal to this Court, which was concerned exclusively with costs, was set down for two days. The issues raised for consideration the whole procedural history of the matter and indicated the extent to which the ascertainment of the amount of costs due to Mr Hartnett occupied the time and resources of the Court and the parties. Mr Hartnett was represented by experienced senior and junior counsel, whereas Mr Bell was represented by junior counsel. It may be inferred from the relative amounts charged by Mr Bell's solicitors and counsel that counsel did the bulk of the work for the appeal, including the preparation of written submissions. The manner in which the litigation was conducted in the Court below, including the complexity of the pleadings, the number and duration of the interlocutory hearings, as well as the effort required for the preparation of the appeal, makes it appropriate to fix the costs payable by Mr Hartnett in a gross sum. It is desirable, in the interests of justice, that neither further time nor cost be spent and that the matter be brought to finality.
We consider the charge-out rates of Mr Bell's legal advisers to be reasonable. The time taken and tasks recorded in their respective tax invoices were reasonably required by the nature and complexity of the appeal. We apply a slight discount to the total claimed (which has already been partly discounted) in accordance with the "broad brush approach" which the authorities indicate ought be taken. We consider that the costs of the appeal ought be quantified in the gross sum of $70,000.
Mr Bell also seeks that the costs of the present application be fixed in a gross sum of $5,000, which we consider to be reasonable, having regard to the evidence prepared, the written submissions and the half-day allocated for the hearing of the matter.

[12]

Other matters

The judgment in the Court below has been quantified in the sum of $311,356.47 (being the sum of $251,255.53 plus pre-judgment interest) plus post-judgment interest pursuant to s 101 of the Civil Procedure Act of $28,162.99 (on the principal of $251,255.53). Orders have been made by the Court below.
For reasons which follow, it is necessary for this Court to note the effect of payment on the following undertaking given by Mr Hartnett to the Court on 9 November 2022 (the Undertaking): "Upon the appellant, Beau Timothy John Hartnett, by his counsel, undertaking to the Court that he will not dispose, dissipate or otherwise deal with any assets for which Mr Hartnett has legal, equitable, or beneficial interest in, including company assets where he is a director and shareholder up to the unencumbered value of $311,356.47, which is defined as the relevant amount provided that his undertaking shall not prevent him from disposing of, dealing with, or diminish the value of any of his assets so long as the unencumbered value of his assets still exceeds the relevant amount order pursuant to s 135 of the Civil Procedure Act that orders number 1 to 3 of the orders of Peden J made in Bell v Hartnett Lawyers (No 3) [2022] NSWSC 1204 on 8 September 2022 and any proceedings under the decision be stayed pending the determination of the appeal or earlier other order."
On 20 November 2023, Mr Bell's solicitors wrote to Mr Harnett as they had not received a response to their letters of 13 and 16 October 2023 (referred to above). They said, in part: "It is still unclear to us whether Mr Hartnett will be paying the judgment sum. If he has no intention to pay it, please let us know. If he intends to pay it, please indicate why he has not done so or, alternatively, pay it into our trust account by 4.00PM today."
Mr Bell's solicitors foreshadowed issuing a bankruptcy notice if payment was not made by 4pm that day.
Mr Hartnett responded by letter dated 21 November 2023 (this was his first communication to Mr Bell's solicitors after the judgment of this Court was delivered on 12 October 2023). Mr Hartnett referred to the Undertaking and maintained that he was still bound by it. He said that the issue of a bankruptcy notice would constitute "an abuse of process."
On 22 November 2023, Mr Bell's solicitors responded by email, to which were attached draft short minutes of order which included an order that Mr Hartnett would not be in breach of his Undertaking by paying the judgment sum into Mr Bell's solicitors' trust account. Further correspondence ensued in which Mr Bell's solicitors set out further draft orders which they contended would bring the matter to finality. Mr Sykes sought that this Court make those orders.
Mr Sykes confirmed that the judgment sum is $311,356.47, comprising $251,255.53 plus pre-judgment interest of $50,489.98. He also informed this Court that the primary judge has specified costs of the proceedings in a gross sum of $185,000 and specified costs of the application for such specification in a gross sum of $3,245. Mr Sykes indicated that post-judgment interest on the principal component of the judgment sum is $69.53 per day and that the figure was $28,162.99 as at 5 December 2023. Mr Sykes also sought release of the amount of $30,000 which was paid by Mr Hartnett as security for costs of the appeal.
We did not understand Ms King to oppose the orders sought, on the basis that the Court makes clear that Mr Hartnett would not be in breach of the Undertaking if he paid the judgment sum.
It is desirable that all issues between the parties as to the Undertaking, interest and costs be ultimately quelled. Accordingly, the orders sought by Mr Sykes ought be made. We note for completeness that s 136 of the Civil Procedure Act provides that, unless the court otherwise orders, any payment made on account of a judgment debt is to be appropriated, first, towards such part of the judgment debt as comprises post-judgment interest and, second, towards the balance of the judgment debt.

At a glance

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Judgment (14 paragraphs)

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Legislation Cited (4)

Cases Cited (17)

Cited By (3)