C2C Investments Pty Limited & Ors v Commonwealth Bank of Australia

Judgment 1This is the Court's fourth judgment in these proceedings. It deals with the question of assessment of costs consequential upon the Court's third judgment: C2C Investments Pty Ltd v Commonwealth Bank of Australia (No.3) [2013] NSWSC 644. In the Court's third judgment the Court granted leave to the plaintiffs to discontinue these proceedings on terms they pay the defendant's costs. The Court directed the parties to file any further evidence in relation to the Bank's motion for a lump sum costs order under Civil Procedure Act 2005 ("CPA") s 98(4)(c). In the result the Bank filed such evidence but Developments and Mr Shannon did not. The Bank filed submissions in support of its motion. The Shannon parties did not. The motion was listed for hearing on 6 June 2013. But the parties invited the Court to deal with the matter in chambers, which it has now done. 2This judgment should be read together with the Court's principal judgment C2C Investments Pty Limited & Ors v Commonwealth Bank of Australia [2013] NSWC 256 and the Court's second judgment C2C Investments Pty Limited & Ors v Commonwealth Bank of Australia (No 2) [2013] NSWSC 521. Events, persons and things are referred to in this judgment in the same way as they are in the first, second and third judgments. 3The Bank's motion seeks to take the benefit of the costs orders made in its favour in the third judgment by now seeking the exercise of the Court's power to award a specified gross sum of costs before costs are referred for assessment. In support of this motion the Bank relies upon two affidavits, one of Nora Minassian of 23 May 2013 and another of Karina Carter of 27 May 2013. As this matter is being dealt with in chambers I note that both those affidavits are read without objection. 4In summary, Ms Minassian and Ms Carter's evidence, which I accept, is the following. They are both solicitors employed by Gadens, the solicitors for the defendant Bank. Ms Minassian says the total amount of legal costs and disbursements incurred by the Bank since the Statement of Claim in these proceedings was filed on 20 September 2012 is $112.938.50 inclusive of GST. This sum is comprised of junior counsel's fees ($37,991.80), senior counsel's fees ($3,300) and solicitors' costs and disbursements ($71,646.70). Ms Carter, a solicitor of 14 years' experience and a specialist in commercial litigation with experience in costs assessment processes says that in her estimation a cost assessor would be likely to assess the gross amount of the bank's recoverable costs including disbursements in a range of 80-90% of the Bank's actual gross costs including disbursements. I accept all the evidence of both Ms Minassian and Ms Carter recorded here. 5The applicable principles in relation to the making of specified gross sum costs orders under CPA s 98(4)(c) may be shortly stated. Although the CPA s 98(4)(c) power has been described as particularly suited to complex litigation, the rule is expressed in general terms and is not limited to cases of that type: Australasian Performing Rights Assoc Ltd v Marlin [1999] FCA 1006 (Burchett J). The power to award a CPA s 98(b)(c) specified gross sum instead of assessed costs is exercised whenever the circumstances warrant its exercise; the purpose of the rule is to avoid the expense, delay and aggravation arising out of taxation: Beach Petroleum NL v Johnson (1995) 57 FCR 119 (von Doussa J). 6Probable inability to pay a costs order will usually provide a proper basis for the making of a s 98(4)(c) order. If the unsuccessful party ordered to pay costs is unlikely to be able to pay the amount of costs ordered then the successful party is further aggravated by having to fund the additional costs of taxation, those costs also being unrecoverable: Harrison v Schipp [2002] NSWCA 213 ("Schipp") at [21] (Giles JA) and Hadid v Lenfest Communications Inc [2000] FCA 628 ("Hadid") (Lehane J). 7There is no procedural obstacle to the CPA s 98(4) discretion being exercised now. CPA s 98(4) provides as follows: 98. Courts powers as to costs (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. 8The Court may make such an order "at any time before costs are referred for assessment". The existing costs order has not been referred for assessment. 9How does the lump sum assessment take place? The specified gross sum under s 98(4)(c) can be fixed broadly, having regard to all the information available to the Court: Schipp at [22] and Hadid at [27]. The approach taken to the estimation of costs must be "logical, fair and reasonable" and the powers should only be exercised when the Court considers it can do so "fairly between the parties, and that includes sufficient confidence in arriving at an appropriate sum on the materials available": Schipp at [22] per Giles JA. 10There are two questions for consideration. Is this an appropriate case for ordering a specified gross sum instead of assessed costs ("a lump sum costs order")? And, if it is, what is the appropriate lump sum costs order in this case. 11A lump sum costs orders should be made here. The evidence and the course of these proceedings well warrants the conclusion that Developments and Mr Shannon may be unlikely to pay a costs order at the conclusion of an assessment. The evidence shows: their default on the original facilities; the sale of their security properties at less than what is claimed to be market value; an absence of evidence of any other assets in their name; their failure to take advantage of the terms upon which the Court permitted them to stay the Consent Judgment by paying monies into Court; the existence of the Consent Judgments against them; and their failure to invest legal resources in opposing the current Motions. I do not see why in these circumstances any party in the position of the Bank should have to expend, probably irrecoverable, resources in a costs assessment. This is an appropriate case for the exercise of the discretion. 12What is the appropriate lump sum award? The Court does not have the full bills of costs that would found a costs assessment. In a fairly simple case, such as the present, the Court may be content to rely an affidavit summarising the total costs figures, as Ms Minassian's affidavit does. Given these proceedings have been going now for some nine months and have involved a number of contested applications the costs figures sighted do not appear surprising or disproportionate to the task in hand or the amount in issue. Ms Carter's evidence that 80-90% of the costs in these circumstances including disbursements will be recoverable should be accepted. Accordingly I will award a lump sum costs order in these proceedings of the sum of $95,200. 13This figure includes the costs of the present application. It is clear that Ms Carter and Ms Minassian's estimates are based upon figures that contemplate the bringing of this application. Therefore there is no need to make any separate order in respect of the costs of this application. 14The Court therefore orders that: The Second and Third Plaintiffs pay to the Defendant a specified gross sum instead of assessed costs in the amount of $95,200. I certify that this and the preceding pages are a true copy of the reasons for judgment of Justice Slattery delivered on 13 June 2013. Associate..................................