Bell Lawyers Pty Ltd v Pentelow

young v king

1. Mrs Young sued her neighbours, Mr and Mrs King, in the Land and Environment Court of New South Wales. The dispute was about drainage. The dispute was settled. Consent orders were entered by that Court on 19 February 2004. [2]
2. Much later, Mrs Young engaged Muriniti and Newell (then a barrister who Muriniti briefed) to act for her in proceedings in that Court to set aside the consent orders, and in separate professional negligence proceedings against her former legal advisors.
3. The application to set aside the consent orders alleged that the Kings had conspired with others, including the local council, to deprive Mrs Young's house of adequate drainage, and to make her responsible for rectifying the resulting problems. The proceedings failed at first instance and on appeal. The first instance judge (Sheahan J) found no evidence of this conspiracy. His Honour criticised the manner in which the proceedings had been conducted and gave the parties liberty to apply for special costs orders.
4. Mrs Young, represented by Muriniti and Newell, brought a motion seeking orders for costs against the Kings and her previous professional advisors (who were, of course, not parties to the proceedings themselves), alleging the same conspiracy. Sheahan J dismissed the motion.
5. The respondents to the motion moved for personal costs orders against Muriniti and Newell. In that application, Muriniti and Newell were represented by Mr D Lloyd (now of Senior Counsel) (the eighteenth defendant in the Equity proceedings), instructed by Mr Bruce Yeldham, solicitor (the sixteenth defendant), assisted by Ms Mary Vitalone (the seventeenth defendant), and retained by Lawcover (the first defendant).
6. Sheahan J made personal gross sum costs orders against Muriniti and Newell, as well as costs orders against Mrs Young.
7. Muriniti and Newell appealed the personal costs orders against them. They went on record and appeared for themselves in the appeal, which failed. An application to the High Court of Australia for special leave to appeal also failed.

the de costi proceedings

1. Newell, instructed by Muriniti, acted in what transpired to be lengthy and complex proceedings in the District Court of New South Wales, for a Mr Wachtenheim (Wachtenheim) and others, in which they were sued by De Costi Seafoods (Franchises) Pty Limited and others for franchise fees in relation to a seafood shop franchise (the De Costi proceedings). [3]
2. Wachtenheim brought a number of cross claims, including against a Mr Schnider, Wachtenheim's brother-in-law and accountant (who was made bankrupt during the De Costi proceedings and has since passed away). Wachtenheim asserted misleading and deceptive conduct by various parties. Mr Schnider was represented by Mr P Doyle Gray of Counsel (the fourteenth defendant), instructed by Ms Deborah Searle (the thirteenth defendant). The proceedings against Mr Schnider were resolved.
3. The De Costi parties were represented by Mr Andrew Thorpe, solicitor (the eighth defendant), assisted by Ms Juliana Ng (the eleventh defendant). They briefed Messrs S Stanton and M Holmes of Counsel (the ninth and tenth defendants).
4. The De Costi proceedings were heard by Judge P Taylor SC DCJ.
5. On 12 December 2011, judgment was given in favour of the De Costi plaintiffs but was stayed pending determination of Wachtenheim's cross claim. The hearing of that cross claim occupied 75 sitting days and was ultimately dismissed by the Court on 3 May 2013.
6. The De Costi parties sought personal costs orders against Muriniti and Newell. Lawcover took over defence of the claim against Muriniti. Ms Elissa Baxter (the second defendant), Lawcover's corporate counsel, had management responsibility for the claim. Newell's insurer was Suncorp (the third defendant), who retained solicitors Ms Wendy Blacker (the nineteenth defendant) and Mr Rory O'Connor (the twentieth defendant) to act. After Ms Blacker and Mr O'Connor moved firms, an additional solicitor, Mr Nicholas Andrew (the twenty-second defendant), was appointed.
7. His Honour made personal costs orders against Muriniti and Newell after a hearing in which Mr Lloyd appeared for Muriniti and Mr G Watson SC (the twenty-first defendant) appeared for Newell.
8. The personal costs orders made by Taylor SC DCJ were the subject of an appeal to the Court of Appeal which was partially successful: Newell; Muriniti v De Costi (2018) 97 NSWLR 398 (in which some of the history of the De Costi proceedings is set out at [2]-[18]). The costs applications were remitted to the District Court. Taylor SC DCJ made orders for the appointment of a referee to assess quantum, and Ms Alyson Ashe was appointed. Muriniti and Newell brought an unsuccessful motion seeking termination of the reference. There then followed a complex disputation concerning the reference, which it is not necessary to recount here. [4]
9. I interpolate that the stay application, which was refused in the principal judgment, was for a stay of the Equity proceedings pending completion of the reference. In other words, Muriniti and Newell sought a stay of proceedings brought by themselves.

the equity proceedings

1. The Equity proceedings were commenced when Muriniti and Newell filed a Statement of Claim on 22 April 2020, although it was not served before 11 September 2020. [5] It was struck out in November 2021. As her Honour observed, there was at the time of the hearing before her no extant pleading on foot in the Equity proceedings. [6]
2. Muriniti and Newell brought a series of motions seeking a temporary stay of the Equity proceedings and, in the alternative, for leave to file an amended Statement of Claim, although, as her Honour recorded, [7] the draft Statement of Claim served by them shortly before the hearing of the motions was not one they wished or intended to prosecute at trial. For their part, various defendants sought summary dismissal or a permanent stay of the Equity proceedings.
3. Her Honour gave consideration on the application of some, but not all, of the defendants to making orders under s 8 of the Vexatious Proceedings Act 2008 (NSW) in relation to Muriniti and Newell, but ultimately declined to do so. Her Honour did, however, refer the matter to the Attorney-General for his consideration as to whether an application under that Act should be brought.
4. In the Equity proceedings, Muriniti and Newell asserted a different conspiracy involving all of the defendants to the Equity proceedings.
5. For present purposes, it suffices to adopt her Honour's description of that conspiracy in the principal judgment at [7]: … an unlawful conspiracy to injure the plaintiffs (by use of unlawful means) … [of] an elaborate plan (involving a raft of alleged conspirators) to put forward baseless or manifestly hopeless personal costs applications in … the De Costi proceedings in the District Court against the plaintiffs, or, depending on the role of the alleged conspirators, to prosecute those applications ineptly, in order to bring about a position whereby there would be personal costs orders made against the plaintiffs, so as to provide the plaintiffs' respective professional indemnity insurers (in the case of Mr Newell) to decline to renew his professional indemnity insurance or the relevant policy or (in the case of Mr Muriniti) to increase premiums payable on renewal of his professional indemnity insurance, with the object or purpose of preventing or dissuading the plaintiffs from continuing to act for a particular client (Mrs Young) in separate proceedings (now disposed of) arising out of a neighbourhood drainage dispute with which many of the defendants have had no involvement or connection (and with the "ultimate purpose" of perverting the course of justice by denying the District Court knowledge of the true circumstances of the costs applications against the plaintiffs and by denying Mrs Young legal representation by the plaintiffs thus impeding the conduct of Court proceedings by her).
6. Her Honour gave detailed consideration to the proposed Amended Statement of Claim identifying the "multiplicity of conspiracies" identified and the other claims of unlawful conduct sought to be made in it, including "suborning of perjury" and the filing of an affidavit with the intention of constructing false evidence. [8]
7. Her Honour concluded that it was appropriate summarily to dismiss the proceedings because it was an abuse of process to make such serious allegations (of fraudulent and criminal conduct) without a proper pleading and then to seek for those proceedings to remain in abeyance for an indefinite period of time. [9]
8. Her Honour considered that a stay of the Equity proceedings until completion of the costs reference (in effect for an unknown period, which would permit further time for the plaintiffs to seek to "unravel" the conspiracy, to discover new evidence, or to confirm their existing suspicions or conspiracy theories) while leaving on foot the very serious (and deficiently pleaded) allegations of criminal conduct and fraud against a raft of disparate groups of defendants would be unjustifiably oppressive to those defendants and would bring the administration of justice into disrepute. [10]
9. Her Honour remarked that the impact of delay and the prejudice to the defendants of the Equity proceedings currently on foot could not be discounted.
10. On 20 September 2022, based on Newell's estimate, I fixed the present motions for hearing to start on Thursday, 10 November 2022 on an estimate of two days. On that occasion, at Newell's request, he appeared remotely. I made directions for the provision of a court book, which was to include written outlines. Muriniti and Newell provided their outline out of time.
11. On 31 October 2022, Muriniti wrote to my Associate and the other parties informing them that Newell has significant health difficulties and that he had requested an adjournment. A medical report dated 31 January 2022 from a General Practitioner was attached. Muriniti stated that he would be writing to all of the parties requesting a consent adjournment but, failing consent, asked for the matter to be relisted so that an application for an adjournment could be made. I heard the application for the adjournment on 2 November 2022. Muriniti appeared. He relied on his own affidavit of the same date. I refused the application. Muriniti informed me that he did not require reasons.
12. I raised with the parties that the application had been set down for two days. I was informed from the bar table that it was expected that it would take two hours at the most. Senior Counsel for the eighteenth defendant put that he could not "see any universe in which it could take two days". [11]
13. As things transpired, the Court was informed shortly before the hearing of the motions that Newell would indeed appear, and he did.
14. The motions took less than half a day.

gross sum orders - the principles

1. Costs, including gross sum orders, are in the discretion of the Court. CPA ss 98(1)(a)-(b) and (4) provide: (1) Subject to rules of court and to this or any other Act - (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and… … (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 - (a) costs up to, or from, a specified stage of the proceedings, or (b) a specified proportion of the assessed costs, or (c) a specified gross sum instead of assessed costs, or (d) such proportion of the assessed costs as does not exceed a specified amount.
2. The circumstances which might justify a gross sum order are not a closed category and each case will, of course, turn on its own facts. The Court must determine whether the order should be made and, if so, what the gross sum is that should be specified. The two questions are related.
3. Even though the Court takes a broad-brush approach to the determination of a gross sum, the assessment must still be fair and reasonable. The quantification should be based on an informed assessment of the costs (incurred or expected to be incurred) and may (and often does) entail applying an impressionistic discount to take account of the possibility that the formal assessment process could involve contingencies, which will not be recognised on a broad-brush approach.
4. Also, s 60 of the CPA applies. It provides: In any proceedings, the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute.
5. An application for a gross sum order should not be a vehicle which exacerbates expense and contributes to delay rather than assuages them. It should therefore be conducted with the appropriate degree of care, but as quickly and summarily as fairness permits. In this respect, I consider it to be no different to the manner in which the Court should deal with whether a costs order should be made against legal practitioners: see Newell; Muriniti v De Costi (2018) 97 NSWLR 398 at [76]. The application should be measured in hours and not in days or weeks.
6. Whilst a broad-brush approach is applied, an application for gross sum orders is not an occasion for the successful party to attempt to overreach the loser on quantum. It is not an opportunity to make an exaggerated ambit claim on the footing that some discount will be applied by the Court to eliminate extravagance. It is incumbent on the applicant for a gross sum order to place enough material before the Court to facilitate a fair and reasonable assessment.

costs of the equity proceedings up to the principal judgment

The defendants' submissions

1. The defendants submit that the orders should be made for the reasons that: 1. the delay and cost of formal assessment will be avoided; 2. Muriniti and Newell advanced various different pleadings, none of which they intended to proceed with, and sought a stay of their own proceedings, making it appropriate for the defendants to be compensated for their costs sooner rather than later and without the burden of the further costs associated with assessment; 3. the conduct of Muriniti and Newell unnecessarily contributed to the costs of the proceedings, with those costs being disproportionate to the result of the Equity proceedings; 4. there is a well-founded apprehension that Newell and Muriniti will conduct any assessment in an adversarial and uncommercial way, rather than in a measured and proportionate way, increasing costs; and 5. throughout the Equity proceedings, Muriniti and Newell repeatedly failed to comply with orders, necessitating the matter to be brought back before the Court, which makes it appropriate that the defendants have their costs paid without further delay.

Muriniti and Newell's submissions

1. The thrust of Newell's submissions in opposition to the orders is that: 1. the defendants are in substance insurance companies with extraordinary resources and a suggestion that they will experience aggravation by the assessment process is fanciful; 2. the defendants will be entitled to seek interest on any costs award, which will compensate them for any delay; 3. the defendants can, unless the assessor awards materially less than what they claim, expect to get their costs of the assessment from the assessor; 4. the costs awarded by Ward CJ in Eq were on the ordinary basis only. Some of the bills have been redacted (for legal professional privilege) leaving "a disturbing brevity in the description of the work claimed"; 5. the argument before Ward CJ in Eq was of relatively narrow scope, essentially concerning a pleading, whereas much of the work the subject of the bills concerned "irrelevant investigation of Muriniti and Newell which had nothing to do with the matter before the Court, except for the purposes of launching a personal attack against [them] and an attempt to ambush [them] by seeking a declaration (which had not been previously announced) that [they] were vexatious litigants", which her Honour declined to do. These concerns would properly be ventilated before a cost assessor who would normally require inspecting the files of each of the applicants to determine whether the costs claimed are just and reasonable (Newell took the Court to one or two examples of what he submitted was irrelevant work); and 6. the Court should not entertain a deviation from the normal, conventional practice of requiring costs to be assessed, but if the Court makes gross sum orders the costs should be reduced by 50 per cent and no orders for costs of the motion should be made.
2. At some point during the argument, Newell appeared to say that gross sum costs orders were not opposed and that he was content to leave the assessment in the hands of the Court. He did, however, then withdraw the submission. I have not treated it as a concession.

Consideration

1. Gross sum orders are warranted in this case for two reasons, each sufficient in itself.
2. First, despite the fact that there was never in existence a satisfactory pleading of the serious professional misconduct and illegal behaviour sought to be alleged on the part of the defendants, most of whom are individuals, the Equity proceedings were on foot for a lengthy period of time (even though they were brought to an end summarily by the principal judgment). The defendants are entitled to have the entirety of the Equity proceedings brought to conclusion expeditiously.
3. Second, it may be anticipated that a formal assessment process will be lengthy and contentious, and it will no doubt be expensive.
4. On 8 November 2022, Muriniti and Newell commenced fresh proceedings by way of Statement of Claim (over 100 pages long), making substantially the same allegations of conspiracy. It is appropriate to resolve what primary orders as to costs in the Equity proceedings should be made before those proceedings go any further.
5. Whether any orders made should be stayed in accordance with the motion brought by Muriniti and Newell is a different question, which will be resolved when that motion is dealt with.
6. Contrary to Newell's submission that the history was not relevant, it is to be observed from the principal judgment that the history of the matter, including the proceedings in Young v King and the De Costi proceedings, were highly relevant to her Honour's consideration and were dealt with in detail. The contest could on one view be considered to have been a pleading dispute, but in my view it entailed significantly more than that.
7. Although there was formally on foot an application for leave to amend, there was in existence no filed pleading at all at the time of the hearing before her Honour, let alone one which properly pleaded the egregious conduct alleged against the defendants.
8. I do not think it lies fairly in the mouth of Muriniti and Newell to say, in the light of the wide ranging and serious allegations being made by them, that the defendants should not fully have investigated prior conduct connected with those allegations.
9. I cannot accept the submission that the defendants invested a great deal of time for the purpose of ambushing Muriniti and Newell with the objective of having them declared vexatious litigants. There is no evidentiary foundation to support this charge. Moreover, although her Honour declined to make such a declaration, she did refer the matter to the Attorney-General.
10. I am satisfied that Muriniti and Newell would adopt a highly adversarial approach in the assessment process, which they would, within the bounds of the applicable ethical standards, no doubt be entitled to do. They would not have to take a commercial approach. But it is plain from Newell's submissions that they would, or would attempt to, ventilate before the costs assessor allegations such as the defendants' objectives to ambush them.
11. I do not consider that an entitlement to seek interest or the prospect of getting costs of the assessment offsets the legitimate entitlement of the defendants to have the Equity proceedings brought to an expeditious end without significant extra cost and delay.
12. I do not consider that a repeated failure by Muriniti and Newell to comply with orders in the Equity proceedings is a proper foundation for the making of a gross sum order. That is more a matter of quantum.
13. Redactions for legal professional privilege (which were not specifically challenged and appeared not to hamper Ms Drew in her assessment) do not constitute grounds to decline to make a gross sum order which is otherwise appropriate.

Quantum

1. I turn to quantum.
2. For reasons which appear below, I will deal separately with the claims for costs with respect to the hearing before Ward CJ in Eq and the costs of this application.
3. Each motion is dealt with separately, but, as will be seen with respect to the costs of this application, they have a common theme.

1st, 2nd, 16th and 17th defendants

1. The first, second, sixteenth and seventeenth defendants rely on affidavits of their solicitor sworn 26 April 2022 and 26 September 2022, and the affidavit and report of Ross Nicholas, an expert costs assessor, sworn 30 May 2022 (the Nicholas report).
2. The evidence adduced includes the total amount billed, supported by invoices and Counsel's fee notes, the persons who worked on the matter and their charge-out rates, and evidence as to the time and expense of a formal costs assessment. Pending receipt of the Nicholas report, these defendants sought a gross sum order of $325,149.31, made up of 75 per cent of solicitors' costs, the entirety of Counsel's costs, and the full amount spent on disbursements.
3. However, according to the Nicholas report, the amount these defendants would likely obtain on assessment, excluding interest, is $292,500.
4. Muriniti and Newell rely on Muriniti's affidavit sworn 24 June 2022 and a report of Sharon Drew, an expert costs assessor, dated 15 August 2022 (the Drew report), which responds to the Nicholas report.
5. Ms Drew examined the material produced by these defendants in detail, reaching the conclusion that she expected fees on assessment would be:

• solicitors' fees of $125,000;
• Counsel's fees of $145,000; and
• disbursements of $14,300.

1. This results in a total of $284,300. Given that this is the figure supported by Muriniti and Newell's own evidence, I consider it to be a safe starting point.
2. I consider that the amount should be subject to a further discount to take account of possible contingencies and reductions that might flow from a formal, heavily challenged assessment.
3. Having regard to the fact that the starting figure is supported by the Drew report, I consider that a smaller discount should be applied than the 40 per cent discount I would have applied absent that expert evidence. I consider that the amount of $284,300 should be discounted by 30 per cent. The result is $199,010, which I will round down to $199,000.

14th defendant

1. The fourteenth defendant relies on affidavits of his solicitor sworn 3 June 2022, 1 July 2022 and 14 October 2022 respectively. The actual sum spent on the Equity proceedings (excluding this application) is $43,466 for solicitors' fees and $20,318 for Counsel's fees and other disbursements. Interest on these costs is claimed.
2. The solicitor gives evidence that 75 per cent of solicitors' fees would likely be recovered on assessment, which is $32,600, which brings the total claimed, excluding interest, to $52,918.
3. I will take as the starting point $52,000, to which I think a 40 per cent discount should be applied, resulting in $31,200.
4. I do not consider there is warrant to allow for interest beyond that which accrues on the gross sum order itself from the date of the order.

18th defendant

1. The eighteenth defendant relies on affidavits of his solicitor sworn 30 May 2022 and 17 October 2022. The actual sum spent on the Equity proceedings (excluding this application) is $36,391 for solicitors' fees, $30,111 for Counsel's fees, and disbursements of $3,049. Applying a reduction of 25 per cent to the solicitors' fees results in a total of $60,454.
2. I will take as the starting point $60,000, to which I think a 40 per cent discount should be applied, resulting in $36,000.

8th and 11th defendants

1. The eighth and eleventh defendants rely on affidavits of their solicitor sworn 31 May 2022 and 13 October 2022. The actual sum spent on the Equity proceedings (excluding this application) is $61,737 for solicitors' fees, $31,349 for Counsel's fees, and disbursements of $2,349. Their solicitor applies a reduction of 20 per cent to the solicitors' fees. Applying a reduction of 25 per cent to the solicitors' fees (which I think is more appropriate) results in solicitors' fees of $46,303 and a total amount claimed of $80,002.
2. I will take as the starting point $80,000, to which I think a 40 per cent discount should be applied, resulting in $48,000.

19th and 20th defendants

1. The nineteenth and twentieth defendants rely on affidavits of their solicitor sworn 31 May 2022 and 25 October 2022. The actual sum spent on the Equity proceedings (excluding this application) is $147,820 for solicitors' fees and $27,588 for Counsel's fees. Their solicitor applies a reduction of 20 per cent to the solicitors' fees. Applying a reduction of 25 per cent results in solicitors' s of $110,865 and a total amount claimed of $138,453.
2. I will take as the starting point $138,000, to which I think a 40 per cent discount should be applied, resulting in $82,800.

costs of this application

1. No order for costs of this application has been made in favour of the defendants, and I do not propose to make one, even though I will otherwise make gross sum orders.

1st, 2nd, 16th and 17th defendants

1. In his affidavit of 26 April 2022, the solicitor for these defendants estimated the costs of this application, including disbursements, to be $31,744. Applying a reduction of 25 per cent to solicitors' fees but allowing Counsel's fees and disbursements at 100 per cent, the amount claimed was reduced to $29,352. However, in his affidavit of 26 September 2022, their solicitor claimed a revised figure of $53,384. This is the amount which was claimed in their written submissions dated 25 October 2022 (on the basis of a two-day hearing, it should be said).
2. The amount ultimately claimed included the following components:

• 84 lawyer hours for preparing the motion, briefing the expert, advising clients, liaising with other parties, and responding to Muriniti and Newell's requests for unredacted invoices;
• 3 lawyer hours for reviewing and settling submissions drafted by Counsel;
• 11 lawyer hours to prepare a court book;
• 5 lawyer hours for correspondence with Muriniti and Newell and other defendants about the motion;
• 16 lawyer hours for "Appearing at hearing of motion to instruct Counsel";
• 4 hours for Senior Counsel to settle submissions; and
• 3 days' worth of Junior Counsel's fees for drafting submissions, preparing for and appearing at the hearing of the motion, and advice as required.

1. The time claimed is not a fair and reasonable reflection of what properly should be, or have been, required to deal with this motion. It is also not proportionate to the significance and complexity of the motion. The following considerations are relevant:

• the motion consists of two prayers only;
• leaving aside the Nicholas report, the affidavits attach documents and give brief evidence about the costs incurred and to be incurred;
• the court book, so far as each of the defendants is concerned, consists only of the motion, the affidavits, and the submissions on the motion (which were added at the end);
• the written submissions are two and a half pages long, a page of which identifies the motion and the affidavits relied upon and specifies what is claimed; and
• the motion took less than half a day, including a brief adjournment. Even if it had taken two full days, there could not have been 16 lawyer hours of appearing at the motion to instruct Counsel, and it is not easy to see how this could have legitimately been claimed.

1. The charges include for Junior Counsel to draft, and both Senior Counsel and the solicitor to settle, the submissions, and for a full day for Junior Counsel's preparation for the motion. First, I do not think the motion fairly or reasonably warranted briefing Senior Counsel. More importantly, however, it is difficult to see how, once the written submissions (which came barely a week before the hearing) had been prepared, which identify the evidence, the legal principles applicable to the motion, and the reasons a gross sum order was sought, any further meaningful preparation was required by either Counsel or solicitors for the motion.
2. I do not consider that costs incurred by the defendants liaising amongst themselves about the motion would properly be for the account of Muriniti and Newell.
3. I also do not consider that the costs of redacting invoices the subject of the claim, access to which Muriniti and Newell were entitled, should properly be for their account either.
4. The written submissions claimed the full amount reached in the Nicholas report with no discount, and the full amount of the claimed costs for the motion without regard to what happened on the ground with respect to the motion.
5. At the conclusion of Counsel's submissions (which had not dealt with the affidavit evidence I have referred to or made any allowance for the fact that the motion took less than half a day), the Court raised difficulties with the amount claimed. As to the large amount of hours for preparing the motion and liaising with other parties, Counsel responded that that was the evidence on the motion. I did not regard this to be a satisfactory response.
6. At that point, the Court was informed that the 16-hour component for appearing on the motion was not pressed. In relation to Counsel's fees, being one day of preparation and two days for the motion, the submission was put that approaching this in a broad-brush fashion would reduce the amount claimed to arrive at a just figure. The total that was pressed was $40,000. This amount, too, even if it were substantiated, is significantly disproportionate to what was involved in the motion.
7. Muriniti and Newell were fully entitled to oppose this component of the claim.
8. They were also entitled to oppose, and have had a material measure of success with respect to, the quantum claimed for the Equity proceedings themselves. Their alternative submission was that a 50 per cent discount should apply. In the case of these defendants, I have applied a 30 per cent discount on the figure claimed by Muriniti and Newell's expert costs assessor.
9. In all the circumstances, and despite the fact that these defendants will obtain gross sum orders, the appropriate order on the motion is that there should be no order as to costs, to the intent that the parties bear their own. [12]
10. However, even if I were minded to make a gross sum order with respect to the costs of the motion, I do not consider that these defendants have placed the Court in a position confidently to make a fair and reasonable assessment of those costs. Justice does not dictate that a figure be plucked out of the air.

14th defendant

1. The fourteenth defendant relies on the affidavit of his solicitor sworn 14 October 2022. In that affidavit, he deposed to the fact that a total of 50.5 lawyer (and paralegal) hours had been spent on the motion and estimated that a further 25 lawyer hours were to be spent, with the following components:

• 7 hours for preparing and settling an affidavit;
• 4 hours for preparing for hearing of the costs application, including for a review of court book and submissions;
• 13 hours for attending the motion; and
• a full hour to report to the client following the hearing of the costs application (something which would have taken only a minute or two).

1. Counsel's fees included four hours to review the affidavit and prepare submissions, a further days' preparation, and two days for the hearing.
2. The total claimed, including solicitors' fees with a 25 per cent reduction and Counsel's fees in full, was $28,121. This is the amount claimed in the written submissions. In the oral submissions, no account was taken of the fact that the motion took half a day until, as mentioned earlier, the Court raised it.
3. The amount claimed is insupportable.
4. When the Court raised its difficulty with Counsel for the fourteenth defendant, the amount suggested "rounding down, with a cost of half a day" was $22,000, that is a reduction of some $6,000. This amount was pressed.
5. This figure still includes a day's preparation for the motion. It is difficult to see how any meaningful preparation for the motion was required by Counsel who had prepared the written submissions or for the solicitors who had drafted the affidavits and settled the submissions.
6. I regard this lower amount, too, to be insupportable, both because I consider the amount of time claimed for to be unjustifiable, and because the amount is significantly disproportionate to what was involved in the motion.
7. The full amount said to have been spent with respect to the hearing before her Honour on solicitors and Counsel was $63,784, and the final amount claimed for the motion for costs is about one third of the costs of the substantive hearing.
8. Muriniti and Newell have achieved a 40 per cent discount to the amount claimed for the substantive hearing.
9. With respect to this defendant, the appropriate order on the motion is that there should be no order as to costs, to the intent that the parties bear their own.
10. With respect to this defendant as well, I consider that he has not placed the Court in the position confidently to make a fair and reasonable assessment of the costs on the motion.

18th defendant

1. The eighteenth defendant relies on the affidavit of his solicitor sworn 17 October 2022, which claimed $34,443, comprising solicitors' fees of $11,296 at a 75 per cent reduction and Counsel's fees of $23,147. This amount was claimed in Counsel's written submissions dated 26 October 2022.
2. These figures include:

• 20.1 lawyer hours for preparation of the motion and affidavits;
• 4.5 lawyer hours to review Counsel's submissions, advice from Counsel and other correspondence with Counsel;
• 6 lawyer hours for correspondence with Muriniti and Newell and other defendants about the motion;
• 16 lawyer hours for appearing at the motion to instruct Counsel; and
• 2 days of Counsel's fees to appear at the hearing, plus one hour to draft submissions and prepare for the hearing.

1. These amounts are insupportable.
2. Once the Court had raised its concerns about the amounts claimed, Senior Counsel for the eighteenth defendant correctly recognised the difficulty. He drew attention to the fact that his instructing solicitor's affidavit of 31 May 2022 had assessed the then anticipated solicitor fees of the motion (then estimated to be two hours) at approximately $8,000 and suggested that this figure should be a starting point to which a discount of 50 per cent might be applied, together with half of his daily fee, which would make a total of $7,750.
3. At least this approach has to commend for it that this amount bears some reasonable proportion to the amount claimed for the costs of the Equity proceedings as a whole. However, I do not propose to adopt it. It does not reflect the manner in which the motion was conducted and the basis upon which Muriniti and Newell were entitled to, and did, deal with it.
4. By 2 November 2022, the position of the eighteenth defendant was that there was no universe upon which the application would take anything like two days. He was correct, but nevertheless initially persisted in an excessive claim for costs.
5. The application of a hefty discount is not a substitute for the provision of material which enables the Court to approach the matter fairly and reasonably.
6. Muriniti and Newell have achieved a 40 per cent discount to the amount claimed by this defendant for the principal proceedings.
7. With respect to this defendant, the appropriate order on the motion is that there should be no order as to costs, to the intent that the parties bear their own. He has not placed the Court in the position confidently to make a fair and reasonable assessment of the costs on the motion.

8th and 11th defendants

1. On their motion, these two defendants and the nineteenth and twentieth defendants jointly instructed Junior Counsel.
2. In her affidavit sworn 31 May 2022, the solicitor for these defendants estimated the costs of this application to be $12,389 based on a four-hour hearing, for which two days were allowed for Counsel to draft submissions and prepare for and appear on the hearing on the motion. The solicitor took 80 per cent of the solicitors' fees, together with 100 per cent of Counsel's fees and disbursements, to reach a figure of $10,907.
3. In her affidavit of 13 October 2022, this was revised upwards to $17,947, which includes:

• 22 lawyer hours for drafting, briefing Counsel, attending the online Court and directions, reviewing affidavits filed by Muriniti and Newell and expert evidence, and correspondence with Muriniti and Newell and other defendants;
• 4 lawyer hours for reviewing and settling the submissions;
• 1 lawyer hour for reviewing the court book and liaising with other parties;
• 12 lawyer hours for appearing to instruct on the motion; and
• 4 days of Counsel's fees (split equally between these defendants and the nineteenth and twentieth defendants).

1. A joint three-page written submission was prepared by Counsel, of which one page was an introduction and background. In them, the $17,947 was claimed, without deduction or reduction.
2. These charges are insupportable.
3. I find it incomprehensible that four days of Counsel's fees to draft three-page submissions and then prepare for and appear on this motion (even if it had taken two days) could have been considered appropriate or justifiable, let alone persisted in.
4. I interpolate that at the hearing - after the Court's exchange with Counsel for the first, second, sixteenth and seventeenth defendants - Counsel for these defendants informed the Court that less than a day was spent by him on preparation. As I have said above, it is difficult to see what meaningful preparation could have been required after the same Counsel had prepared written argument one week earlier.
5. Counsel's final submission was that the estimate was calculated on the basis of a two-day hearing, which was not pressed "if the hearing is truncated or, indeed, ends today".
6. Muriniti and Newell have achieved a 40 per cent discount to the amount claimed for the principal proceedings by these defendants.
7. With respect to these defendants, the appropriate order on the motion is that there should be no order as to costs, to the intent that the parties bear their own. They have not placed the Court in the position to make a fair and reasonable assessment of the costs on the motion.

19th and 20th defendants

1. In his affidavit sworn 30 May 2022, the solicitor for these defendants estimated the costs of this application to be $19,259. This was based on a two-hour motion for which Senior Counsel would settle submissions and be briefed to appear, for which these defendants would bear one third of the costs, apparently because such an arrangement had existed with other defendants with respect to the hearing before her Honour. As with the eighth and eleventh defendants, four days was allowed for Junior Counsel, with the costs to be shared between them.
2. Three hours of solicitors' time was allowed for reviewing and settling Counsel's submissions.
3. This estimate was reviewed upwards in the solicitor's affidavit sworn 25 October 2022 to $23,567. With a reduction of 20 per cent in the solicitors' fees, the total figure of $20,009 was reached, which was the amount claimed in Counsel's written submissions dated 28 October 2022.
4. This revised figure includes:

• 27.2 lawyer hours for drafting, briefing Counsel, attending the online Court and directions, reviewing affidavits filed by Muriniti and Newell and expert evidence, and correspondence with Muriniti and Newell and other defendants;
• 4 lawyer hours for reviewing and settling the submissions;
• 1 lawyer hour for reviewing the court book and liaising with other parties;
• 12 lawyer hours for appearing to instruct on the motion; and
• 4 days of Counsel's fees (split equally between these defendants and the nineteenth and twentieth defendants).

1. My comments in relation to the insupportability of the costs claimed by the eighth and eleventh defendants apply with equal force here.
2. Muriniti and Newell have achieved a 40 per cent discount to the amount claimed for the principal proceedings by these defendants.
3. With respect to these defendants, the appropriate order on the motion is that there should be no order as to costs, to the intent that the parties bear their own. They have not placed the Court in the position confidently to make a fair and reasonable assessment of the costs on the motion.

conclusion

1. I make the following orders: 1. Pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW): 1. The costs of the first, second, sixteenth and seventeenth defendants are specified in the gross sum of $199,000 instead of assessed costs. 2. The costs of the fourteenth defendant are specified in the gross sum of $31,200 instead of assessed costs. 3. The costs of the eighteenth defendant are specified in the gross sum of $36,000 instead of assessed costs. 4. The costs of the eighth and eleventh defendants are specified in the gross sum of $48,000 instead of assessed costs. 5. The costs of the nineteenth and twentieth defendants are specified in the gross sum of $82,800 instead of assessed costs. 1. Pursuant to s 101(4) of the Civil Procedure Act 2005 (NSW), I order that interest is to accrue only on such of these amounts as remains unpaid 28 days after the date of these orders. Such interest is to be calculated from the date of these orders. 2. I otherwise dismiss each of the following motions with no order as to costs to the intent that the parties shall pay their own: 1. Notice of Motion of the first, second, sixteenth and seventeenth defendants filed 26 April 2022. 2. Notice of Motion of the fourteenth defendant filed 3 June 2022. 3. Notice of Motion of the eighteenth defendant filed 30 May 2022. 4. Notice of Motion of the eighth and eleventh defendants filed 31 May 2022. 5. Notice of Motion of the nineteenth and twentieth defendants filed 30 May 2022.
2. I will give directions with respect to the motion by Muriniti and Newell to stay Order 1.

Endnotes

1. Motions are brought, respectively, by the first, second, sixteenth and seventeenth defendants together; the eighth and eleventh defendants together; the fourteenth defendant; the eighteenth defendant; and the nineteenth and twentieth defendants together.
2. Principal judgment at [56]-[66].
3. Principal judgment at [67]-[125].
4. Principal judgment at [97]-[124].
5. Principal judgment at [126].
6. Principal judgment at [153].
7. Principal judgment at [2].
8. Principal judgment at [163]-[183].
9. Principal judgment at [499].
10. Principal judgment at [500].
11. Transcript 02/11/2022, page 3, lines 35-39.
12. In any event, since Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333, Muriniti and Newell cannot recover the costs of their own exertions. 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: 22 November 2022