Solicitors:
Watson Law Pty Ltd (Plaintiffs)
Creagh & Creagh (Third and Sixth Defendant)
Solari & Stock (Fourth Defendant)
Dentons Australia (Fifth Defendant)
File Number(s): 2017/154803
[2]
Introduction
On 13 December 2017 I heard the balance of proceedings for possession brought in respect of a property at Catherine Field (the Property) by Camden Nurseries Pty Limited and Craig and Julie Wilson (the plaintiffs) against six defendants, who will be referred to in greater detail below. I made orders and published reasons on 15 December 2017: Camden Nurseries Pty Ltd v Aussie Growers (Aust) Pty Ltd [2017] NSWSC 1770. The orders disposed of the substantive proceedings. I also made costs orders which were, relevantly, in the following terms:
"(8) Order the third defendant to pay the plaintiffs' costs of obtaining these orders.
(9) Order the sixth defendant to pay the plaintiffs' costs of obtaining these orders, such costs to be limited to costs incurred from 1 December 2017."
I also granted leave for the successful parties to apply for an order pursuant to s 98(4) of the Civil Procedure Act 2005 (NSW) (the Act). The plaintiffs applied for a gross sum costs order within the time allowed by the grant of leave. The third and sixth defendants opposed the making of a gross sum costs order and contended that the amount claimed was excessive.
Camden Nurseries Pty Ltd v Aussie Growers [2018] NSWSC 118 | Case summary | Zoe
In order to address the plaintiffs' application it is necessary to set out, in summary form, some background facts.
On 20 September 2017 default judgment in a money sum was ordered against Aussie Growers (Aust) Pty Ltd (the first defendant), Camden Herbs & Nursery Pty Ltd (the second defendant) and Louise Cassar (the third defendant). The day after entry of default judgment, the third defendant purported to sell her half share of the Property (which was encumbered by an equitable mortgage granted by her to the plaintiffs) to Marjan Corporations Pty Ltd (the sixth defendant). The other half share of the Property, which had been owned by the third defendant's son, became vested in his trustee in bankruptcy (the fourth defendant) upon his being made bankrupt.
The sixth defendant lodged a caveat on the title to the Property to protect its interest under the contract for sale. The plaintiffs amended their statement of claim to seek an order for possession of the Property. On 1 December 2017 the plaintiffs approached the Duty Judge for leave to file a further amended statement of claim to seek an order that the caveat be withdrawn. Leave was granted.
The matter came before me for final determination as Duty Judge on 13 December 2017. I held, in the reasons referred to above, that the contract for sale between the third and sixth defendants was a sham and made the orders sought by the plaintiffs.
[3]
The plaintiffs' application for costs to be paid in a gross sum
[4]
The parties' submissions
The plaintiffs submitted that the present case was an appropriate one for costs to be ordered to be paid in a gross sum for the following reasons:
1. it would be undesirable to require the plaintiffs to incur further costs in an assessment when the costs sought were incurred in trying to enforce a judgment of the Court;
2. the third and sixth defendants contributed to the cost and delay by entering into a contract which was found to be a sham;
3. the cost of the costs assessment would be disproportionate to the costs incurred and would tend to delay the ultimate settlement of a sale by court order of the Property and, accordingly, the realisation of the Property to enforce the judgment; and
4. the Court is in a position to determine an appropriate gross sum by reason of the affidavit of Ms Watson sworn 29 January 2018.
The third and sixth defendants resisted the order on the following bases:
1. the tax invoices provided by the plaintiffs' solicitor are insufficient for the Court to form a judgment as to the appropriate gross sum, particularly in circumstances where the costs agreements entered into by the plaintiffs' solicitors and counsel have not been annexed;
2. the plaintiffs claim a portion of their total costs in circumstances where the Court could not have confidence that the costs would actually be recoverable on assessment; and
3. the case is unexceptional, which renders it an inappropriate vehicle for this procedure.
The third and sixth defendants submitted, in the alternative, that, if I were persuaded to make an order pursuant to s 98(4) of the Act, the amount claimed ought be significantly reduced.
[5]
Consideration
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. Relevantly, the remaining issue in the present proceedings is the amount of the costs which ought be paid by the third and sixth defendants to the plaintiffs pursuant to orders (8) and (9) made on 15 December 2017. It may be accepted that 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.
The Court of Appeal (Beazley P, Meagher and Payne JJA) provided guidance on this question in the following passage from Bechara (trading as Bechara and Company) v Bates [2016] NSWCA 294:
"[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].
. . .
[18] The Court is satisfied that the total costs of this litigation will become even more disproportionate if the costs are referred for assessment and a lump-sum costs order is not made. The reasoning in Hamod v New South Wales at [816]-[817] is apposite."
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 evidence established that the plaintiffs' solicitor/client costs (including disbursements) for the period from 20 September 2017 to 30 November 2017 were $26,024.40 (including barrister's fees of $10,362 and the hearing fee of $5,022); and that the plaintiffs' solicitor/client costs (including disbursements) for the period from 1 December 2017 were $10,585 (including barrister's fees of $6,664). By reason of the terms of order (8) set out at the beginning of these reasons, the solicitor/client costs relevant to fixing the gross sum payable by the third defendant are $36,609.40 including GST and, by reason of order (9), those relevant to fixing the gross sum payable by the sixth defendant are $10,585 including GST.
The amount of these costs is not particularly great, having regard to the work covered and the fact that there were eight separate court appearances between 20 September 2017 and 13 December 2017. Although I do not have direct evidence of the costs likely to be incurred if these costs were assessed, it is reasonable to infer that they would be sufficiently significant to be potentially disproportionate to the amount claimed. This would have the potential to cause injustice, particularly if the costs could not be recovered.
The amount of the costs and disbursements claimed appears to me to be reasonable. Mr Crossland's hourly rate was $400 not including GST. He charged $1,600 (excluding GST) for the final hearing which was a contested hearing and involved cross-examination. There were, as my reasons indicated, several issues in dispute and a relatively complex narrative. Although the hearing was conducted efficiently in about two hours in the Duty Judge's list, the work required to distil the hearing time to accommodate it within the list was considerable. Moreover it could not be predicted in advance whether and when it could be heard that day, which required the full day to be set aside, although Mr Crossland charged for only half a day. I regard his fees in these circumstances as modest. The solicitors' tax invoices provide a detailed description of the task undertaken and the amount charged. They indicated that Ms Watson was not present to instruct Mr Crossland at the final hearing (13 December 2017), which is also an indication of the modesty of the fees charged.
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. Mr Crossland, in his written submissions, contended that no such discount ought be applied because the amount of the costs charged to the plaintiffs was so modest. As noted above, Mr Pearson, on behalf of the third and sixth defendants, contended that, if costs were ordered to be paid in a gross sum, there should be a significant discount applied to the amount claimed by the plaintiffs.
Because of the view to which I have come about the reasonableness of the costs and disbursements and the further matter to which I will refer below, I am not persuaded that there should be a significant discount. However, I consider that there should be some discount to reflect the nature of the process, which is, by its nature, less refined than a costs assessment. The further matter which makes it appropriate that the discount be relatively small is that the costs of the plaintiffs' application for costs to be paid in a gross sum are not included in the invoices already rendered. The plaintiffs are entitled to these costs. I propose to order the third and sixth defendants to pay the plaintiffs' costs of this application but order that such costs be included (notionally) in the gross sum awarded. This will have the desirable effect of bringing this litigation to an end at first instance. The discount will be relatively modest because of this matter, as well as the evident reasonableness of the fees charged both by the plaintiffs' solicitors and counsel. I consider that a discount in the order of 10% ought be applied. The resultant figures are rounded (down) in recognition of the fact that the ordering of cost to be paid in a gross sum is intended to be broad brush process, which stands as a substitute for the more detailed process of costs assessment.
[6]
Orders
1. Order the third defendant, pursuant to s 98(4) of the Civil Procedure Act 2005 (NSW), to pay the plaintiffs' costs in the specified gross sum of $32,900, including GST.
2. Order the sixth defendant, pursuant to s 98(4) of the Civil Procedure Act 2005 (NSW), to pay the plaintiffs' costs in the specified gross sum of $9,500, including GST.
3. Order the third and sixth defendants to pay the plaintiffs' costs of their application for costs to be paid in a gross sum pursuant to s 98(4) of the Civil Procedure Act 2005 (NSW).
4. Note that the costs which are the subject of order (3) are included in the amounts specified in orders (1) and (2).
[7]
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Decision last updated: 23 February 2018