On 15 December 2022 I granted leave to the plaintiffs in these proceedings to appeal against the determination of a Costs Review Panel arising out of a costs assessment and review of ordered costs (party/party): Cappello v Transport for New South Wales [2022] NSWDC 730. I then dismissed the plaintiffs' Summons and ordered the plaintiffs to pay the costs of the defendant as assessed or agreed. Liberty to apply in relation to costs was also granted.
The defendant exercised the liberty to apply, foreshadowing an application pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (the "Act") that the costs awarded to it, pursuant to order 4 of my earlier judgment, be determined by the Court on a lump sum basis.
On 16 December 2022 I made orders directing the parties to serve on each other, and to deliver to my Associate, any costs orders that each seeks, together with evidence in support and written submissions in support of such orders by 27 January 2023. I also ordered that any evidence in reply on costs and written submissions in reply be served on each other, and delivered to my Associate, by 10 February 2023.
On 27 January 2023 the defendant served, and provided to my Associate, submissions in support of an application for a gross sum costs order ("the Defendant's submissions"), together with an affidavit of Holly Morgan affirmed 27 January 2023 on which it relies. The orders sought by the defendant are that the costs awarded to it, pursuant to my earlier judgment, be determined by the Court in the amount of $17,832.87 (inclusive of the current application) or such other sum as the Court thinks fit.
On the same day, Mr Hall, who had appeared for the plaintiffs at the hearing before me, filed a Notice of Ceasing to Act.
On 31 January 2023, the plaintiffs sent an email to my Associate, copied to the solicitor for the defendant, in the following terms:
Dear Associate,
Trevor Hall of Hall Partners no longer acts for the plaintiffs.
We understand that the defendant seeks a lump sum for its costs.
The plaintiffs do not wish to be heard on the question. It is a matter within his Honour's discretionary costs power and if his Honour is satisfied that a lump sum costs order is appropriate and that the amount thereof is appropriate on a party and party ordinary basis, it is open to his Honour to make such an order.
We are filing a Summons for judicial review of his Honour's judgment in the substantive proceedings this week. If the Summons is successful, the orders made including the costs order would likely be set aside and the quantum of costs would be determined at NIL.
His Honour is aware of the proceedings before her Honour Judge Gibson which are now the subject of judicial review by the Supreme Court. Her Honour granted a stay on the costs which were the subject of the appeal before her on the basis of judicial review. We would seek a similar order as was made by her Honour be made in these proceedings, that being that the stay be subject to filing the Summons for Judicial Review.
Yours faithfully,
Rosario and Maria Cappello
Also on 31 January 2023, an email in reply to the plaintiffs, copied to the solicitor for the defendant, was sent as follows:
Dear Mr and Mrs Cappello,
If you wish to apply for a stay, it will be necessary to make an application setting out the orders sought and providing submissions and/or evidence in support. If the defendant consents to such an order, it may be possible for orders to be made in chambers by consent. Otherwise it will be necessary for you to make a formal application.
Kind regards,
Yvonne Ng | Associate to his Honour Judge Andronos SC | District Court of New South Wales
There the communications rest. No stay application has been made and there has been no indication from the defendant that it consents to such an order.
On 17 March 2023, her Honour Judge Gibson delivered reasons in Cappello v Homebuilding Pty Ltd (No.2) [2023] NSWDC 54, being the determination of an application by the defendant in those proceedings for the costs of the Summons to be paid on an indemnity basis and for a gross sum costs order pursuant to s 98 of the Act. The plaintiffs in those proceedings are the same parties as the plaintiffs in the current proceedings before me.
At [36] - [37] of her Honour's reasons, Judge Gibson states:
A stay of these orders
36. There have already been precipitate proceedings in the Parramatta registry of this Court in relation to enforcement.
37. In the interests of assisting the parties to focus on the applications before the Court of Appeal, I have placed a stay on these orders until 5 pm on 28 March 2023, when the matter is next before the Court of Appeal for directions concerning the defendant's motion. Any further stay should be sought from the Court of Appeal on that day.
As indicated above, there is no application before me, supported by evidence or submissions, to support the grant of any stay. The defendant has not indicated whether or not it consents. There is no evidence of the pendency of any proceedings in the Court of Appeal. Further, there is no evidence before me as to any similarity in circumstances between those before her Honour and those before me that might establish a basis for a stay in these proceedings. I shall return to this issue at the end of these Reasons.
[2]
Evidence on the defendant's application for a gross sum costs order
The defendant relies on the affidavit of Holly Morgan referred to above. That affidavit establishes, to my satisfaction, the following:
1. The defendant has incurred fees by the Crown Solicitor in these proceedings in the amount of $4,473.70, comprised in three invoices (582944, 587845 and 589472).
2. The hourly charge out rate for the fee earners engaged in performing work for the defendant in this matter are $397 per hour ex GST (Ms Morgan, Senior Solicitor Grade VI, admitted 2008) and $322 per hour ex GST (Ms Carolina Strati, Solicitor Grade I - III, admitted 2022). In Ms Morgan's experience, charge out rates for solicitors of comparable experience in commercial, or non-government, law firms are typically higher.
3. The rates charged by Ms Castle, counsel for the defendant in this matter, are $250 per hour ex GST and $2,000 per day ex GST. Ms Castle's rates for non-government clients are $500 per hour and $5,000 per day.
4. On an earlier assessment before a Costs Assessor, the rates of $384 per hour for senior solicitors and $312 per hour for junior solicitors ex GST were considered fair and reasonable in respect of the costs the subject of these proceedings. The Guidelines also provide a range of rates as follows:
Senior partner/partner/specialist (10+ years) (hourly) $450-$750
Senior associate (5 years plus) (hourly) $300-$500
Employed solicitor/junior associate (1-4 years) (hourly) $200-$400
Junior counsel (daily) $2,000-$5,000
[3]
Total fees and disbursements incurred on behalf of the defendant in these proceedings up to 17 November 2022 are $16,090.37.
2. Ms Morgan estimates the fees incurred in making the present lump sum costs application (ex GST) to be:
1. 1½ hours (at $397 per hour) to prepare Ms Morgan's affidavit and annexed documents, and review any evidence in reply from the plaintiffs;
2. 30 minutes (at $397 per hour) to settle the defendant's submissions and a further 30 minutes (at $397 per hour) to attend to correspondence in respect of the application; and
3. counsel's fees in the sum of $750 to settle evidence (one hour at $250 per hour) and prepare submissions (two hours at $250 per hour).
1. The total sought by the defendant by way of a lump sum costs order is, therefore, $16,090.37 for costs and disbursements up to the application for the lump sum order, and a further $1,742.50 for costs and disbursements of the lump sum application. This amounts to $17,837.87. No other disbursements are claimed and no further discount on professional fees is offered in calculating the sum sought on the lump sum order.
[4]
Applicable principles
The defendant relies on the power conferred on the Court by s 98(4) of the Act to order a "specified gross sum instead of assessed costs".
The power may be exercised wherever the Court determines the circumstances warrant its exercise: Harrison and Another v Schipp (2002) 54 NSWLR 738 at 742 ([21]); [2002] NSWCA 213.
The circumstances may include where such an order would avoid the expense, delay and aggravation arising out of taxation: Bell v Hartnett Lawyers (No.2) [2021] NSWSC 1270 at [60] per Slattery J.
In determining whether to make a lump sum costs order, the Court may have regard to all relevant information, including the evidence before it, its own observations of the proceedings and the judge's own experience: Bobb v Wombat Securities Pty Ltd & Ors (No 2) [2013] NSWSC 863. The evidence must give the Court sufficient confidence that it can arrive at an appropriate gross sum. Expert evidence is permissible but not necessary, particularly in small cases. Costs should be proportionate.
Courts have been readily persuaded to exercise the power where the litigation is satellite litigation, in the sense that the matter being litigated is the cost of the litigation itself. See also in this regard eInduct Systems Pty Ltd v 3D Safety Services Pty Ltd [2015] NSWCA 284 per Basten JA. Similar considerations apply to appeals about the costs of the provision of legal services, particularly where those costs have been the subject of both assessment and review.
The power to award a gross sum costs order was exercised by Beech-Jones J (as his Honour then was) in Bobb (No 2). His Honour noted that lump sum costs might be awarded in a short and relatively straightforward case, but noted that the protections afforded by the costs assessment regime should not be undermined by too quick a resort to the power under s 98(4).
In that case, his Honour took into account the relative modesty of the costs claimed, being $22,000, the risk that the costs of the assessment might be thrown away due to the impecuniosity of the liable party, and the fact that the issues were straightforward so that the Court could make a reasonably well-informed assessment as to the appropriate level of costs.
His Honour noted at [8]:
Further, it must be borne in mind that the substantive issue of the proceedings was a dispute over the costs assessment process. A further order requiring the re-engagement of that process has the risk that the substantive dispute between the parties will become wider rather than narrower.
The history of existing disputes as to the previous assessment may also be taken into account: In the matter of Palladium Consulting Pty Ltd [2013] NSWSC 92 at [14] per Black J.
[5]
Whether a lump sum costs order should be made
In the present case, the defendant submits the following matters are relevant as to whether a lump sum costs order should be made at all:
1. The subject matter of the proceeding relates to the costs of legal proceedings. In this regard, the defendant has already incurred expense, delay and aggravation arising out of the assessment of ordered costs under the order of the Supreme Court made on 18 April 2019.
2. A further order requiring re-engagement with the costs assessment process risks a repeat of this cycle, and constitutes "satellite litigation" in the sense deprecated by Basten JA in eInduct.
3. The evidence the Court must consider on the gross sum application is of limited size and narrow compass.
4. The costs incurred and claimed are modest: Ms Morgan's evidence is that the rates charged by solicitors and counsel are lower than ordinary commercial rates and are, in any event, well within the guidelines of the Costs Assessment Rules Committee for party/party costs.
5. The substantive proceedings in this Court were relatively simple in terms of procedure and length, and raised limited issues.
6. The determination of the defendant's application can be made on the papers in line with the overarching purpose of the Act.
7. The Court has before it sufficient material on which to be comfortably satisfied that it can arrive at a fair result.
8. A costs assessment would require another decisionmaker to become familiar with the subject matter of the proceeding. It is desirable to put an end to unnecessary further expense and consumption of resources.
I accept the submissions of the defendant in this regard. On that basis, I propose to make an order that the defendant's costs of these proceedings be paid in a gross or lump sum. As indicated above, the plaintiffs did not wish to be heard in this regard.
[6]
Quantum
The relevant principles to be taken into account in determining the quantum of any gross sum are:
1. A broad brush approach is appropriate given that the specification of the gross sum is not the result of a taxation or assessment process: Harrison v Schipp at [22].
2. The Court will typically apply a discount against the contingencies of a costs assessment in order to achieve justice between the parties. The Court must nevertheless be careful not to cause injustice to the successful party by applying so large a discount as a "failsafe" mechanism as to deprive it of costs to which it would be entitled: Hancock v Rinehart (Lump Sum Costs) [2015] NSWSC 1640 per Brereton J at [57].
On the basis of the evidence in Ms Morgan's affidavit, I am satisfied that the costs claimed by the defendant are reasonable. In particular, I note the rates at which both solicitors and counsel have conducted this matter are comparable to those considered fair and reasonable before the costs assessor and are well within the Costs Assessment Rules Committee Guidelines. Ms Castle, in particular, conducted this matter at a substantial discount to the rate charged by her to non-government clients.
Typically, the Court applies a discount to professional costs in order to bring actual costs and disbursements incurred approximately into line with those which might be recovered on an assessment. In the present case, the evidence shows the work which was performed, by whom it was performed, over what period and at what rate. I am generally satisfied on the basis of that evidence that substantially all of the costs and disbursements recorded in Ms Morgan's affidavit would be recoverable.
I do note, however, that the professional costs include an estimate for responding to evidence from the plaintiff and correspondence in respect of this application. Given the approach of the plaintiffs, such tasks have not been required. Accordingly, I propose to allow a discount against the fact that some of the apprehended tasks with respect to the present application have not been required. To this end I propose to apply a discount of one hour at a rate of $397 per hour against the solicitors' professional costs. I do not propose to discount counsel's fees at all. I further note that no other disbursements are sought to be recovered.
Accordingly, I will order the defendant's costs in these proceedings be paid in a lump sum calculated as follows:
Professional costs
$4,473.70 (to date of affidavit) + $992.50 (estimated) $5,466.20
Less $397 discount $397.00
Total professional costs $5,069.20
Disbursements: counsels fees
$11,616.67 (to date of affidavit) + $750 (estimated) $12,366.67
Total disbursements $12.366.67
Total $17,435.87
[7]
Stay and orders
As indicated above, the plaintiffs foreshadowed an application for a stay on the basis of the purported similarities between this matter and the matters addressed by her honour Judge Gibson in Cappello v Homebuilding Pty Ltd (No.2). For the reasons set out above, on the material before me, I can see no basis upon which a stay could be granted. There is no evidence that the defendant has sought to enforce its entitlement to the costs the subject of these proceedings. Nevertheless, against the possibility that the plaintiffs were under a misapprehension as to the appropriate course (notwithstanding the clear advice of my associate on 31 January 2023), I will stay enforcement of these orders until 5 pm on 30 March 2023, to enable the parties to correspond and, if necessary, for the plaintiffs to seek any stay either from this Court or the Court of Appeal.
The orders of the Court are:
1. Pursuant to s 98 of the Civil Procedure Act 2005 (NSW), the plaintiffs are to pay the defendant's costs by way of a gross sum costs order, namely $5,069.20 for professional costs together with $12,366.67 for counsel's fees, making a total of $17,435.87.
2. Stay these orders until 5pm on 30 March 2023.
[8]
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Decision last updated: 06 April 2023