Burrows v Law Society of New South Wales

Supreme Court of NSW|2018-06-21|Before: Adamson J

Solicitors: Zali Burrows (Plaintiff) Law Society of New South Wales (Defendant) File Number(s): 2018/24244

Introduction

On 22 May 2018 I published my reasons for decision in this matter and ordered Zali Burrows (the plaintiff) to pay the Council for the Law Society of New South Wales' (the defendant's) costs of the proceedings, including the hearing on costs: Burrows v Council for the Law Society of New South Wales (No 3) [2018] NSWSC 737. I also granted leave to the defendant to apply for an order that its costs be paid in a gross sum pursuant to s 98(4) of the Civil Procedure Act 2005 (NSW) (the Act).
By notice of motion filed on 5 June 2018 the defendant applied for an order pursuant to s 98(4) of the Civil Procedure Act and sought that it be paid the gross sum of $54,800. It filed an affidavit of Ann-Marie Foord sworn 5 June 2018 and an affidavit of John Fleming sworn 6 June 2018.
My Associate contacted the parties to ascertain whether they agreed that the application be dealt with on the papers. The defendant responded to say that it agreed to it being dealt with in that way. No response was received from the plaintiff. On 15 June 2018, the return date of the notice of motion, the Registrar referred the notice of motion for hearing before me. Mr Flax, who appeared for the defendant, informed me that he had received an email that morning at 7.57am to say that Ms Winfield of counsel would appear on the motion and would seek to have the matter adjourned. Ultimately, at 9.45am Ms Winfield appeared. I made directions and listed the matter for hearing before me at 2pm on 21 June 2018.

The defendant's evidence and submissions

In her affidavit Ms Foord outlined the way in which the defendant calculated the costs claimed under the motion. A spreadsheet which summarises the defendant's costs is annexed and marked "A" to her affidavit. The spreadsheet indicates that the defendant has discounted its staff costs by 25% and counsel's fees by 10%. The charge-out rates are also set out. After the application of these discounts, the total, excluding GST, was $54,877.95. This amount was rounded down in that the sum claimed in the motion was $54,800.
In his affidavit Mr Fleming deposed to his experience in costs assessment, including in recovering the defendant's party/party costs when a costs order is made in its favour and negotiating costs orders against it. Mr Fleming opined that a costs assessor would regard the rates for solicitor's fees and counsel's fees set out in annexure "A" to Ms Foord's affidavit to be reasonable. He also referred to the "Guideline of Costs Payable Between Parties Under Court Orders" dated 16 March 2016 produced by the Costs Assessors Rules Committee which is annexed and marked "A" to his affidavit. Mr Fleming also outlined the work which would be involved if costs were to be assessed in this matter. He also listed the additional costs that would be occurred if costs were assessed which would include the cost of production of a formal party/party bill of costs, a filing fee, the costs assessor's fees and professional costs in preparing the application and responding to objections.
The defendant submitted that it is in the interests of justice that the quantum of its costs be determined without the delays and costs inherent in assessment. It submitted that its claim for 75% of staff costs and 90% of counsel's fees was a reasonable, if not conservative, assessment of what it would likely be awarded after a costs assessment.

The plaintiff's submissions

The plaintiff did not adduce any additional evidence on the question of costs, although, in her written submissions dated 18 June 2018 she said: "[1] The plaintiff relies upon all affidavits filed by her in these proceedings as to [the] history of the matter."
The plaintiff submitted that the defendant ought to have consented at an early stage for costs. The plaintiff submitted that she ought not be liable for the defendant's costs of providing particulars to her. The plaintiff also submitted that the defendant had not acted in good faith in that it opposed a subpoena.
The plaintiff submitted that only a nominal sum ought be ordered to be paid. She said, in her written submissions: "[16] Since the costs have already been ordered, they should be limited. See Independent Commission against Corruption v Cripps NSWSC 27 August 1986, unreported. [17] An order that a successful party pay the costs of an unsuccessful party is generally regarded as requiring particular justification. See Ottway v Jones [1955] 1 WLR. [18] The decision to order costs is an exception to the rule that costs follow the event, the Society did not succeed. Therefore, the amount being sought is a punishment rather than a fair assessment of their costs, many of which have been incurred after they decided to lift the suspension. [19] The plaintiff respectfully submits that this is a case that each party pay its own costs and costs are a compensation not a punishment. The amount the Law Society is seeking is a punishment. The plaintiff seeks nominal costs to be awarded."

Consideration of the plaintiff's submissions

Many of the plaintiff's submissions appear to cavil with the order I made on 22 May 2018 that she pay the defendant's costs of the proceedings and the costs of the hearing on costs. The only question outstanding is whether the costs ought be ordered to be paid in a gross sum or whether the application ought be refused, in which event the defendant would have to apply for the costs to be assessed, if not agreed.
The plaintiff has not sought to challenge any of the rates charged by the defendant's staff or counsel briefed or the discount rates. The plaintiff made no submissions which were directed to the calculations in Ms Foord's evidence. Nor did she challenge any part of Ms Foord's or Mr Fleming's evidence. She has raised particular matters which she contended ought not to have been included. The plaintiff has raised the question of costs associated with the defendant having to provide her with particulars. I am satisfied that the defendant has not sought costs associated with the particulars. As to the allegation of lack of good faith, argument with respect to the plaintiffs subpoena was dealt with by Schmidt J on 23 February 2018: Burrows v Council of the Law Society of New South Wales [2018] NSWSC 235. The relevant resolutions were made on 18 (not 17) January 2018. I accept that the defendant answered the subpoena by reference to the documents then in existence.
It is difficult to understand the plaintiff's submission that the defendant ought to have consented to a costs order in the context of what occurred: namely, that each party sought an order for costs in its or her favour (as the case may be). At the conclusion of the hearing, the defendant was successful and obtained an order for costs in its favour, which included not only the costs of the proceedings, but also the costs of the costs hearing. Plainly, if the plaintiff had consented to an order that she pay the defendant's costs rather than contest the matter at a hearing, the costs she would be ordered to pay would have been substantially less.

General principles concerning orders that costs be paid in a gross sum

The relevant principles to be applied when considering whether to order costs to be paid in a gross sum pursuant to s 98(4) of the Act include the matters referred to in Part 6 of the Act. I am obliged to give effect to the overriding purpose of the Act and the rules of court, which is "to facilitate the just, quick and cheap resolution of the real issues in the proceedings": s 56 of the Act. Ordering costs to be paid in a gross sum is both quicker and cheaper than having such costs assessed. The real question is whether it is just.
In Bechara (trading as Bechara and Company) v Bates [2016] NSWCA 294 the Court of Appeal (Beazley P, Meagher and Payne JJA) said, of present relevance: "[12] The power to award a lump-sum should only be exercised when the Court considers that it can do so fairly between the parties and where an appropriate sum can be determined from the available materials: Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 at 742-723 [21]-[22]; Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 123. [13] The power may also be exercised where a party's conduct has unnecessarily contributed to the costs of the proceedings, especially where the costs incurred have been disproportionate to the result of the proceedings: Hamod v New South Wales [2011] NSWCA 375 at [818] per Beazley JA (Giles and Whealy JJA agreeing). [14] A "broad brush" approach is appropriate. To require the same or similar level of detail as in a formal costs assessment would defeat the purpose of the lump sum order: Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR 1; [1999] FCA 673 at 5 [16]; Penson v Titan National Pty Ltd (No 3) [2015] NSWCA 121 at [7]. [15] The courts have typically applied a discount in assessing costs on a gross sum basis: Hamod v New South Wales at [814]. . . ."
I am persuaded that, in the present case, it is not only cheap and quick, but also just to order that the costs be paid in a gross sum for the following reasons.
The amount of the costs and disbursements claimed appears to me to be reasonable. Ms Webster SC's hourly rates and daily rates were relatively modest, as were the staff costs charged by the Law Society. It was appropriate that senior counsel be briefed in such a matter, given that she was briefed in the principal hearing, there was some urgency and that the matter was one of importance to both parties. Ms Webster was not assisted by junior counsel, which limited the cost of counsel. The contest on costs involved detailed evidence and consideration of the steps the defendant had taken before suspending the plaintiff's practising certificate, which led to the commencement of the proceedings. There were several issues in dispute and a relatively lengthy narrative. The suspension of the plaintiff's practising certificate was brought about by the plaintiff's repeated failures to respond to correspondence from the defendant. If the matter proceeded to costs assessment, there is no reason to believe that communications will be other than protracted. The costs of the costs assessment are likely to be disproportionate, having regard to the relatively modest sum claimed.
It is usually the case that a discount is applied to the amount of the solicitor/client costs in order to accommodate the "broad brush" nature of the process. The defendant has already applied a significant discount to its staff costs of 25% and a discount of 10% to Ms Webster's fees. As the hourly rates were, as I have described, modest, there is no reason to apply any further discount, except by way of rounding (down) to reflect the nature of the process, which is, by its nature, less refined than a costs assessment. It is of significance that the plaintiff did not challenge these fees or these discounts in her submissions.

Orders

For the reasons given above, I make the following order: 1. Order the plaintiff, pursuant to s 98(4) of the Civil Procedure Act 2005 (NSW), to pay the first defendant's costs in the specified gross sum of $54,000, excluding GST.

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: 21 June 2018

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