Solicitors:
Yates Beaggi (Applicant on Mr Calabretta's Interlocutory Process dated 4 July 2024; Respondent for gross sum costs applications)
Lloyd & Lloyd (Plaintiffs/Respondents on Mr Calabretta's Interlocutory Process dated 4 July 2024; Applicant on gross sum costs application)
Addisons (Mr Hayes as liquidator of Sirrah Pty Ltd (in liq and Sirrah Pty Ltd) (Respondent on Mr Calabretta's Interlocutory Process dated 4 July 2024; Applicant on gross sum costs application)
File Number(s): 2017/383731 (022, 023)
[2]
Judgment
This judgment deals with the costs of an application ("Calabretta Application") brought by the Applicant, Mr Calabretta, purportedly in his capacity as receiver appointed to the assets of Ms Michelle Harris, which had several unfortunate features. I should first outline the nature of that application and I have here drawn on my earlier judgment in the Calabretta Application in Re Sirrah Pty Ltd [2024] NSWSC 953 ("Earlier Judgment").
By his Interlocutory Process dated 4 July 2024 that commenced the Calabretta Application, Mr Calabretta purportedly "on behalf of" Ms Harris sought orders that the Plaintiffs pay Ms Harris' costs of substantive proceedings ("Principal Proceedings") which had been brought by the Plaintiffs, as executors of the estate of the late Mrs Aileen Harris, as a derivative claim on behalf of the First Defendant, Sirrah Pty Ltd (in liq) ("Sirrah"), against, inter alia, Mr William Harris, Ms Harris and Harris Health Care Pty Ltd (in liq) ("HHC") as agreed or assessed. The Calabretta Application was brought over three years after I delivered the costs judgment in respect of the costs of the Principal Proceedings which reserved liberty to Ms Harris to apply on a limited basis. Mr Calabretta also sought an order that, upon his giving the usual undertaking as to damages and until further order, the amount of $750,000 (or such other sum as the Court reasonably determined) be retained by the Plaintiffs in their solicitor's trust account.
On 15 July 2024, I ordered that:
"There be determined as separate issues, before any substantive issues in the proceedings, the questions:
(1) Whether this application can properly be commenced by Mr Calabretta "on behalf of" Ms Harris; and
(2) Whether the circumstances in which liberty to apply was reserved, namely that Ms Harris pay or confirmed that she accepted liability to pay costs, in the light of the matters noted in the Court's judgment [2021] NSWSC 492 and any independent advice she had obtained, are established."
At the commencement of the hearing of these separate issues on 29 July 2024, Mr Calabretta sought leave to file an Amended Interlocutory Process, which identified the capacity in which he sought the relevant orders as receiver and manager of Ms Harris' property and sought an additional order (which he ultimately did not press) that:
"Leave be granted nunc pro tunc to Dominic Calabretta in his capacity as Receiver and Manager of the property of [Ms Harris] to seek the relief sought in the interlocutory application filed 4 July 2024."
Mr Calabretta had purportedly been appointed as receiver to Ms Harris' assets by an iteration of an incorporated legal practice trading under the name "Yates Beaggi Lawyers" ("YBL"). As I noted in my Earlier Judgment, that firm had, in the relevant period, traded through two or possibly three different companies and two different trusts, and had been involved in this matter in several capacities, including as the solicitor acting for Ms Harris and other Defendants in the Principal Proceedings, through two companies which purportedly appointed Mr Calabretta as receiver to Ms Harris' assets, and then and now as the solicitor acting for Mr Calabretta in the proceedings.
Although Mr Calabretta appeared to have brought the Calabretta Application in his capacity as receiver, purportedly appointed to Ms Harris' assets on 18 June 2024, it was common ground by the time of the hearing before me on 29 July 2024 and 2 August 2024 that that appointment was invalid. After the invalidity of his initial appointment as receiver to Ms Harris' assets emerged, Mr Calabretta relied on a subsequent Deed of Novation executed by one of the iterations of YBL to give either prospective or retrospective effect to his appointment as receiver to Ms Harris' assets. In my Earlier Judgment, I held that:
"It seems to me that, here, the Deed of Novation did not effectively create the "fiction" (to use Ms Nolan's frank term) that it sought to achieve, that validated the previous and ineffective appointment of Mr Calabretta, because it substituted new obligations for the old but did not retrospectively change the fact that the previous appointment of Mr Calabretta was ineffective nor bring about a new appointment of Mr Calabretta as receiver without any express statement that it sought to do so. There is no reason for the Court to strain here to adopt a "fiction", again using Ms Nolan's term, where there was no apparent reason that [the relevant YBL company] (assuming it was party to the [Legal Services Agreement with Ms Harris]) could not have simply undertaken a new and straightforward appointment of Mr Calabretta as receiver to [Ms Harris'] assets, had it wished to do so, rather than taking this convoluted approach."
Mr Calabretta had named Mr Hayes as First Defendant in the proceedings and as a Respondent to the Interlocutory Process, although no relief was sought against him in the Interlocutory Process and Sirrah and not Mr Hayes as its liquidator was the First Defendant in the proceedings; Sirrah had itself not taken an active role in proceedings which were brought by the Plaintiffs in its name as derivative proceedings; Mr Hayes was neither a necessary nor a proper party to the Calabretta Application; and there was no basis on which a costs order could have been made against Sirrah (which had previously filed a submitting appearance) rather than the Plaintiffs. Ms Nolan, who appeared then for Mr Calabretta, accepted that an order should be made substituting Sirrah for Mr Hayes as the First Defendant, and that Mr Hayes should be excused from further attendance at the commencement of the hearing. Ultimately, I invited his legal representatives to remain at the hearing for a period in the circumstances that I address below.
Consequentially, as I also noted in my Earlier Judgment in the Calabretta Application, that application "raised wider and more difficult issues" than had initially appeared to arise from the form of the Interlocutory Process and the terms on which leave was reserved to Ms Harris to bring a costs application. I addressed the costs of that application (Earlier Judgment [54]-[55]) as follows:
"Ms Nolan submitted that any costs order in favour of the Plaintiffs should exclude time spent in submissions on 29 July 2024 in addressing documents relating to the change of the entity by which YBL conducted business in the first half of 2020 and that each party should pay their own costs as to that matter. I do not consider that such an exclusion is warranted. First, the documentation was exhibited to Mr Amirbeaggi's affidavit and was properly addressed; second, the time spent accept that submission was limited, and any benefit from exclusion of those costs would likely be outweighed by the additional costs and complexity that would introduce in any assessment of costs; and, in any event, I have not determined the question of which entity was conducting the business at the relevant time, but simply assumed the position for which Mr Calabretta contends, which the Plaintiffs do not contest.
For these reasons, Mr Calabretta should be ordered to pay the Plaintiffs' costs of and incidental to the application up to the close of 28 July 2024 and from 29 July 2024 on an ordinary basis. Mr Calabretta should also be ordered to pay Mr Hayes' costs of and incidental to the application on an indemnity basis, where there was no proper basis to join Mr Hayes as party to the application."
I made orders (Earlier Judgment [56]) that:
"1. The separate questions should be answered as follows:
(1) Whether this application can properly be commenced by Mr Calabretta "on behalf of" Ms Harris - As is conceded by Mr Calabretta, it cannot be brought in this form.
(2) Whether the circumstances in which liberty to apply was reserved, namely that Ms Harris pay or confirmed that she accepted liability to pay costs, in the light of the matters noted in the Court's judgment [2021] NSWSC 492 and any independent advice she had obtained, are established - Does not arise.
2. The Interlocutory Process filed by Mr Calabretta on 4 July 2024 be dismissed.
3. The oral application made by Mr Calabretta for leave to file an Amended Interlocutory Process be dismissed.
4. Mr Calabretta pay the costs of the Plaintiffs of and incidental to this application up to and including 28 July 2024 on an indemnity basis and from 29 July 2024 on an ordinary basis.
5. Mr Calabretta pay the costs of Mr Hayes as liquidator of Sirrah Pty Ltd (in liq) ("Sirrah") of and incidental to this application on an indemnity basis.
6. Reserve leave to the Plaintiffs, Mr Hayes as liquidator of Sirrah and Sirrah to apply, by an application brought within 14 days, for quantification of the costs of this application on a gross sum basis."
The Plaintiffs, Mr Hayes and Sirrah brought applications for gross sum costs orders and I subsequently made orders dealing with the service of evidence and submissions in respect of the costs orders. The parties were content to have the applications determined in both matters in Chambers.
[3]
The Plaintiffs' application for a gross sum costs order
By Interlocutory Process filed on 15 August 2024, the Plaintiffs seek an order under s 98(4) of the Civil Procedure Act 2005 (NSW) ("CPA") that they be entitled to a gross sum in the amount of $67,338.95 (inclusive of GST), or such other amount as the Court thinks fit in respect of the costs orders made on 5 August 2024, and that they be entitled to a gross sum costs order in the amount of $9903 (inclusive of GST) or such other amount as the Court thought fit in respect of the costs of the gross sum costs application.
Affidavit evidence
The Plaintiffs relied, in support of their gross sum costs application, on the affidavit dated 15 August 2024 of their solicitor, Mr See, who set out his experience as a solicitor and noted that he has also been a costs assessor of this Court since 2014 and has had experience in assessing costs on an indemnity basis, party/party basis and in relation to practitioner/client costs in that role. Mr See exhibited the Costs Assessment Rules Committee ("CARC") Guidelines for assessment of costs payable between parties under Court orders. Mr See there calculated the amount of costs that would be payable on an indemnity basis up to and including 28 July 2024 and on an ordinary basis after that date, in accordance with Order 4 made on 5 August 2024. Mr See set out the hourly rates applicable to Counsel and to persons within his firm who worked on the application and expressed the view that those charge-out rates would be allowed in full in an indemnity costs assessment. Mr See also expressed the view that the costs generally recoverable on an assessment on an "indemnity" basis are similar to those recoverable on a solicitor and own client basis, which generally result in the recovery of solicitors' costs at approximately 90-100% of costs incurred, and recovery of disbursements in full if not unreasonable and proportionate to the significance or quantum in dispute. Mr See also addressed the costs recoverable on an ordinary basis, in a manner consistent with the Court's general approach in gross sum costs applications. Mr See's evidence is also that the Plaintiffs are not registered for GST and will not receive an input tax credit in respect of GST payable on legal fees payable by them.
Mr See in turn set out the legal fees charged by his firm in relation to the Interlocutory Process dated 4 July 2024 and exhibited copies of the relevant invoices, redacted to exclude entries for which no claim is made for costs was made and to preserve legal professional privilege. He confirmed that the time entries accurately reflected the time spent on the work by himself and members of his staff and expressed the view, which I accept, that the work done was done at an appropriate level of seniority and that the relevant charges were fair and reasonable and were properly chargeable and recoverable. Mr See also expressed the view that costs charged by Counsel were fair and reasonable and proportionate, and I accept that matter given the complexity of the issues raised in the Calabretta Application. Mr See recognises a possibility that the fees of Mr Zahra SC would not be permitted on an assessment and allows a discount of 20% on those fees on that basis. While I would have allowed those fees in full in a gross sum costs application, I should proceed on the basis that that discount is accepted by the Plaintiffs.
Mr See also calculated the estimated costs which will be incurred in respect of this application for a gross sum costs order, which seem to me to be reasonable, and likely significantly less than the costs which would be incurred on an assessment.
Mr Calabretta relies on Mr Amirbeaggi's affidavit dated 13 September 2024 in response to the Plaintiffs' application. Mr Amirbeaggi is a principal of YBL in its several iterations, took the steps which brought about the invalid appointment of Mr Calabretta as receiver of Ms Harris' assets and also acted for Mr Calabretta in the Calabretta Application and acts for him in this application. By that affidavit, Mr Amirbeaggi stated the amount of legal costs, counsel fees and disbursements incurred by Mr Calabretta, but did not exhibit or annex the invoices or timesheets that would support that statement. Mr Amirbeaggi did not otherwise take issue with Mr See's calculation of the Plaintiffs' costs or the basis on which they were calculated.
The applicable principles
By their written submissions dated 27 September 2024, the Plaintiffs pointed to the nature of the issues determined in the Calabretta Application and to the applicable principles. I have previously summarised the applicable principles in respect of a gross sum costs order in Saba v Plumb [2017] NSWSC 955 at [23] as follows:
"Section 98(4) of the Civil Procedure Act relevantly provides that the Court may make an order to the effect that a party to whom costs are to be paid is entitled to a specified gross sum instead of assessed costs. That power is commonly exercised where costs have been incurred in a lengthy or complex case although it is not in its terms limited to such a case … The power to make a gross sum costs order should only be exercised where the Court considers it can do so fairly between the parties, including achieving an appropriate sum on the materials available to it, and the Court typically applies a discount in assessing costs on a gross sum basis. [citations omitted]"
I again adopted that summary in Re Beverage Freight Services Pty Ltd [2020] NSWSC 509. Mr Anderson, who appears for the Plaintiffs, also refers to my further summary of those principles in Re Beverage Freight Services Pty Ltd [2020] NSWSC 797 ("Beverage Freight Services") at [19], as follows.
"As I noted in the Earlier Judgment [in that case], s 98(4) of the Civil Procedure Act 2005 (NSW) relevantly provides that the Court may make an order to the effect that a party to whom costs are to be paid is entitled to a specified gross sum instead of assessed costs. … that power is commonly exercised where costs have been incurred in a lengthy or complex case, but it is not limited to such a case: Simone Starr-Diamond v Talus Diamond (No 4) [2013] NSWSC 811 at [8]. … the power to make a gross sum costs order should only be exercised where the Court considers it can do so fairly between the parties, including achieving an appropriate sum on the materials available to it, and the Court typically applies a discount in assessing costs on a gross sum basis: Ritchie's Uniform Civil Procedure NSW [s 98.65]; Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 . A gross sum costs order may also be made to avoid the expense, delay and aggregation involved in litigation arising out of an assessment: Harrison v Schipp [2002] NSWCA 213; (2002) 54 NSWLR 738. Where a gross costs order is to be made, the Court is not required to undertake a detailed examination of the kind which would be undertaken in a cost assessment, in determining a gross sum payable, and will apply "a broad brush" approach: Hadid v Lenfest Communications Inc [2000] FCA 628 at [35]; Harrison v Schipp above at [22]."
I also there addressed a submission that a substantial discount should be applied and noted Brereton J's observation in Hancock v Rinehart (Lump Sum Costs) [2015] NSWSC 1640 ("Hancock v Rinehart") at [57] that:
"While it is undoubtedly the usual practice of the court when making a lump sum costs order to apply a discount for the reasons mentioned, that does not mean that the Court must apply a percentage discount to the sum sought by the successful party, and the Court "must be astute not to cause an injustice to the successful party" by applying "an arbitrary 'fail safe' discount on the costs estimate submitted to the court". Thus if the court can be confident that there is little risk that the sum includes costs that might be disallowed on assessment, the case for a discount is seriously undermined."
Whether a gross sum costs order should be made
Mr Anderson submits, in support of the application for a gross sum costs order, that the substantive proceedings which were the subject of the claim for costs in the Calabretta Application were commenced by Originating Process filed in 2017 and Mr Calabretta's Interlocutory Process was not filed until 15 July 2024, more than 7 years after those proceedings were commenced and 3 years after the orders were made determining them and costs in the proceedings, but reserving liberty to apply as to costs to Ms Harris. Mr Anderson submits, and I accept, that it would be undesirable for the Plaintiffs to now be required to embark on a costs assessment process to quantity the costs recoverable under Order 4 that I made on 5 August 2024, and that a gross sum costs order would achieve finality more expeditiously than a costs assessment. I accept that a gross sum costs order should be made, both in respect of the Plaintiffs and the liquidator, on that basis.
The amount of the gross sum costs order
Mr Anderson submits, and I also accept, that the Plaintiffs evidence is such that the Court may be confident that the approach taken to estimate the Plaintiffs' costs is logical, fair and reasonable. Mr Anderson refers to Mr See's evidence, which I summarised above, and notes that Counsel's fees are often allowed in full in a gross sum costs assessment, unless there is reason to think those fees are not within an appropriate range: Beverage Freight Services at [36]. Mr Anderson also submits that, having regard to Mr See's evidence, the Court "can be confident that there is little risk that the sum [claimed] includes costs that may be disallowed on assessment", adopting the language of Brereton J in Hancock v Rinehart at [57]. I have regard to the fact these costs are addressed by detailed evidence but have not been the subject of an assessment and I am satisfied that no further discount for the solicitors' costs is required, beyond that allowed in Mr See's calculations. I noted above that the Plaintiffs had accepted a discount on Mr Zahra's fees, and I am satisfied those fees are properly allowed on that basis.
In his submissions in chief on behalf of Mr Calabretta in response to the Plaintiffs' gross sum costs application, Mr Amirbeaggi submits that the Plaintiffs had acted unreasonably in their defence of the Calabretta Application and the costs that had already been ordered in their favour should be reduced on that basis. That question must, of course, be assessed having regard to the circumstances of the Calabretta Application, which I noted in paragraph 2 above.
First, Mr Amirbeaggi submits that the Calabretta Application was a "routine application" for an order for costs. Mr Anderson, for the Plaintiffs, rightly responds that the application was not, contrary to Mr Amirbeaggi's submission, of a "routine" character where it raised the question whether an invalid appointment of a receiver could be cured by novation or ratification. It seems to me that there was nothing "routine" about an application for costs made by Mr Calabretta "on behalf" of Ms Harris, some 7 years after proceedings were commenced and 3 years after liberty to apply for costs was reserved to Ms Harris, where Mr Calabretta had not validly been appointed as receiver to Ms Harris' assets, particularly where Mr Calabretta also sought an order that the Plaintiffs' solicitors retain the amount of $750,000 to pay assessed costs of Ms Harris' defence where she had taken only a limited role in the substantive proceedings.
Second, Mr Amirbeaggi points to the fact that a significant part of the first day of the hearing related to questions as to the structure of YBL. I have noted above that a wider issue in that regard was ultimately not pressed by the Plaintiffs on the second day of the hearing. Mr Amirbeaggi also notes that the second day of hearing was directed to the question whether the initial failure validly to appoint Mr Calabretta as receiver to the assets of Ms Harris could be remedied by a novation made by the YBL entities. Mr Amirbeaggi submits that the steps taken by the Plaintiffs were unreasonable and detracted from the real issues to be determined. I do not accept that submission. The question whether Mr Calabretta was properly appointed as a receiver of Ms Harris' assets was critical to the determination of the Calabretta Application, where the Court could not make an order for costs in favour of Ms Harris on Mr Calabretta's application unless he had validly been appointed as the receiver of her assets, where to do so would prejudice, inter alia, Ms Harris. The further complexities in respect of the novation arose, not from any conduct of the Plaintiffs, but from YBL's attempt to address the invalidity of Mr Calabretta appointment as receiver of Ms Harris' assets by that novation, rather than consenting to dismissal of this application and then taking such further steps as they wished. There is no basis for Mr Calabretta to complain that the Plaintiffs unreasonably incurred the costs of addressing that situation, which was not of their making.
Third, Mr Amirbeaggi submits that the costs incurred by the Plaintiffs were unreasonable, having regard to the lesser costs said to have been incurred by Mr Calabretta in respect of the application, although those costs had not been established by more than his statement of them in his affidavit. Mr Anderson responds, and I accept, the question whether the costs incurred by the Plaintiffs were reasonable cannot be determined by comparing it with the costs incurred by Mr Calabretta, even apart from the fact that the evidence of those costs is limited to a statement of them in Mr Amirbeaggi's affidavit. Mr Amirbeaggi's submission does not engage with the detailed evidence led by the Plaintiffs to support the Plaintiffs' claim for costs and I do not accept it.
Fourth, Mr Amirbeaggi submits that the Court could not determine the costs claimed without the assistance of "independent evidence" and he submits that it should refer the claim to a costs assessment or a costs referee. I also do not accept that submission, which is inconsistent with the many cases in which Courts have made gross sum costs orders, including in proceedings of substantially greater complexity than this application, as an alternative to assessment and without appointing a referee.
Fifth, Mr Amirbeaggi advances specific objections to costs claimed for work undertaken by the Plaintiffs' legal representatives in respect of the application. Mr Amirbeaggi submits that the hearing should have been conducted either by junior counsel or the solicitor on the record for the Plaintiffs, and Mr Anderson contests that submission. I do not accept that it was unreasonable for the Plaintiffs to retain Senior Counsel for the application, given that Mr Calabretta sought to have $750,000 set aside from moneys to which the Plaintiffs would otherwise be entitled and the application had the other features to which I referred in paragraph 2 above. Mr Amirbeaggi also submits that the work done by the Plaintiffs' legal representatives was premature, where it followed the filing and/or service of Mr Calabretta's Interlocutory Process on 4 July 2024, and Mr Anderson takes issue with that submission. I also do not accept that it was unreasonable for the Plaintiffs' legal representatives to begin their work after the Calabretta Application was served, and before Ms Harris' affidavit was served, given the size of the amount that Mr Calabretta sought to have withheld from the Plaintiffs' entitlements.
Sixth, Mr Amirbeaggi submits that the costs incurred by the Plaintiffs should be reduced or Mr Zahra's costs excluded because part of the work undertaken by the Plaintiffs' legal representatives related to the issues as to the several restructurings of YBL, which were not pursued by the Plaintiffs in their widest form. I do not accept that submission. First, the Court has already determined that Mr Calabretta must pay the costs of the Calabretta Application. In doing so I had rejected a submission by Ms Nolan to the same effect as is now put by Mr Amirbeaggi. Mr Calabretta has not sought and would likely not obtain leave to reopen that determination. Second, the case law, to which Mr Amirbeaggi did not refer, recognises that the Court will ordinarily not apportion costs between issues on which a successful party succeeded and those on which it did not: Cellarit Pty Ltd v Cawarrah Holdings Pty Ltd (No 2) [2018] NSWCA 266 at [10]-[14]. Third, the circumstances of the Calabretta Application, including the issue arising from the several changes in the structure of YBL, the difficulties arising from the invalidity of Mr Calabretta's appointment and the invalidity of the subsequent attempt to novate that appointment, do not warrant any attempt to segregate the costs of the application between particular issues.
Mr Amirbeaggi, purportedly in reply, puts a submission which is not properly made in reply, namely that the costs claimed by the Plaintiffs' legal representatives are not recoverable against the Plaintiffs under s 172 of the Legal Profession Uniform Law because they involved an "over service or were unreasonable given the nature of the application". There is no proper evidentiary basis for that submission, and it cannot properly be determined where first made in reply, where to do so would deprive the Plaintiffs (and, so far as an allegation is made against them, their legal representatives) of procedural fairness in respect of the allegation.
In reply, Mr Amirbeaggi also repeats Mr Calabretta's submission in chief that the Plaintiffs' claim for costs should be referred to costs assessment and repeats the submission there was "nothing complex nor unique" about the claim for costs. I have rejected the submission that there was "nothing complex" about the application in dealing with Mr Calabretta's submissions in chief. While it is not necessary to determine whether there was anything "unique" about the application, I am not aware of any previous application for costs made 7 years after proceedings were commenced and 3 years after they were determined, by a receiver who was invalidly appointed. Purportedly in reply, Mr Amirbeaggi also advances additional criticisms of the work done by the Plaintiffs in chief in respect of the application, which I will also not determine where they are not properly raised in reply and the Plaintiffs have had no opportunity to respond to them. Mr Calabretta otherwise largely does not address the evidence and submissions made by the Plaintiffs in chief.
I have addressed the submissions made for Mr Calabretta in respect of the quantum of costs claimed by the Plaintiffs above. As Mr Anderson points out in submission in reply, Mr Calabretta's evidence in chief and his submissions did not otherwise challenge the hourly rates of the practitioners representing the Plaintiffs; the content or application of the CARC Guidelines for the assessment of costs; the experience or qualifications of the legal practitioners representing the Plaintiffs; the quality of work performed by them; or the methodology adopted by Mr See in calculating the relevant costs. I am satisfied that the Court can do justice to the parties in making a gross sum costs order in respect of the Plaintiffs' costs, which will avoid the detriment to them of the further costs and delay of an assessment in proceedings that were commenced 7 years ago and the evidence led by the Plaintiffs is sufficient to support a gross sum costs order in the amount claimed.
[4]
Liquidator's and Sirrah's costs application
By Interlocutory Process filed on 19 August 2024, Mr Hayes as liquidator of Sirrah also seeks an order under s 98(4) of the CPA that he be entitled to a gross sum costs orders in the amount of $15,689.30 (inclusive of GST) or such other amount as the Court thinks fit. As I noted above, Mr Calabretta had named Mr Hayes as First Defendant in the proceedings and as a Respondent to the Interlocutory Process, although no relief was sought against him in the Interlocutory Process; Sirrah and not Mr Hayes as its liquidator was the First Defendant in the proceedings; Sirrah had itself not taken an independent role in proceedings which were brought by the Plaintiffs in its name as derivative proceedings; Mr Hayes was neither a necessary nor a proper party to the Calabretta Application; and there was no basis on which a costs order could have been made against Sirrah rather than the Plaintiffs.
Affidavit evidence
Mr Hayes relies on the affidavit dated 19 August 2024 of his solicitor, Mr Mattiussi, who sets out his experience as a solicitor, including in relation to the recovery of legal costs in litigation matters. Mr Mattiussi refers to the hourly rates that he and a solicitor acting in the matter charged and he expresses the view that costs recoverable on an indemnity basis would be similar to costs recoverable on a solicitor and own client basis; would result in the recovery of approximately 90-100% of solicitors' costs; and would result in recovery of disbursements, including Counsels' costs, in full if they were reasonable and proportionate to the significance or the quantum in dispute. He also refers to the invoice issued by his firm for the costs in issue which is exhibited to his affidavit, in a form redacted to exclude entries for which no claim for costs is made and privileged information. He also annexes a work in progress report for unbilled work done in August 2024, and there was no suggestion those costs were not subsequently billed and are not recoverable. He confirms that the time entries reflect the time spent on the work by him and members of his staff and expresses the view, which I accept, that the work done was done at an appropriate level of seniority and the relevant charges are fair and reasonable. Mr Mattiussi quantifies the liquidator's recoverable costs as in the range of between $14,195.77 and $15,689.30, depending on whether 90% or all of those costs, plus the filing fee, are recoverable.
Mr Calabretta relies on Mr Amirbeaggi's affidavit dated 13 September 2024 in response to Mr Hayes' application. Mr Amirbeaggi there refers to a communication sent by Mr Mattiussi to the Court on 25 July 2024 which noted that, although Mr Calabretta had named Mr Hayes as the First Defendant in respect of his application, Mr Hayes was (as I noted above) not the First Defendant in the proceedings and was not a proper party to the proceedings, and Sirrah had previously filed a submitting appearance in the proceedings. He notes that my Associate had responded, at my request, that the Court would deal with those matters on return of the proceedings on 29 July 2024 and that, on that date, I made an order noting that no relief was sought against Mr Hayes or Sirrah and those entities were excused from further attendance. Mr Amirbeaggi also rightly notes that I invited the liquidator's solicitors to remain in attendance while the further issue that I noted in paragraph 5 above was determined, where that issue potentially raised matters in which Mr Hayes had an obvious legal interest. In particular, that issue potentially raised wider questions as to the status of Mr Calabretta's previous appointment as a receiver of the assets of Mr Harris (as distinct from Ms Harris), the validity of which had been assumed in previous orders made by the Court. In the event, on the second day of the hearing, the Plaintiffs chose not to press those wider issues (as distinct from a narrower issue as to the validity of Mr Calabretta's appointment as receiver of Ms Harris' assets) and I did not determine those wider issues in the Earlier Judgment.
Amount of costs recoverable by the liquidator and Sirrah
Mr Amirbeaggi submits, in opposition to Mr Hayes' application for a gross sum costs order, that, notwithstanding the order made on 29 July 2024 excusing Mr Hayes and Sirrah from attendance:
"based upon a misapprehension of the facts, [Black J] invited the liquidator's solicitor to remain at Court because [Black J] believed that what he was about to discover might affect the interests of the Liquidator."
Mr Amirbeaggi then submits that:
"Given the agreed position of the parties, that Mr Hayes/Sirrah would not participate in the proceedings, and that the continuation of their participation only came about by reason of [Black J's] invitation to Mr Mattiussi to remain in Court which was based upon [Black J's] misapprehension, there should be no liability by Mr Calabretta to meet the costs of Mr Hayes/Sirrah of the Proceedings".
Mr Mattiussi responds that, as I have noted above, it was Mr Calabretta who had joined Mr Hayes and Sirrah as parties to the application, where the former was not a proper party to the application and there was no basis to seek an order for costs against the latter, and had thereby put Mr Hayes and Sirrah to the costs of the application. Mr Mattiussi also submits that Mr Amirbeaggi's submission that I invited the liquidator to remain represented at Court "based upon a misapprehension of the facts" does not affect the fact that Mr Hayes' legal representatives were at the hearing, in the first place, because Mr Hayes had been wrongly joined as a party to the Calabretta Application. Mr Mattiussi points out that the question whether Mr Calabretta had been validly appointed on 16 June 2021 as receiver and manager to the property of Mr Harris (as distinct from Ms Harris) and HHC, which had arisen when the fact of the several restructurings of YBL emerged, was of substantial significance for the conduct of the proceedings and previous orders made in an application brought by Mr Hayes in the proceedings. Mr Mattiussi also submits that, where Mr Hayes' legal representative was invited to remain at Court because the issues that had been raised could affect his and Sirrah's legal interests, then it was reasonable for him to do so. Mr Mattiussi also points out that Mr Amirbeaggi's submissions directed to the period in which Mr Hayes' solicitor remained in Court at the Court's invitation did not address the prior costs incurred by Mr Hayes in responding to his joinder to the application.
I do not accept that Mr Calabretta's submission as to this matter provides a proper basis for reducing the costs that should be ordered in favour of Mr Hayes and Sirrah. First, Mr Calabretta is bound by the costs orders that the Court has already made against him and has not sought and would likely not obtain leave to reopen them. Second, Mr Calabretta's submissions do not impeach Mr Hayes' entitlement to recover his and Sirrah's costs incurred prior to that point at which he was excused from attendance on 29 July, where Mr Calabretta had wrongly joined him as a defendant, without a proper basis on which to do so, and where Mr Calabretta also had no basis to claim costs against Sirrah. Third, I had invited Mr Hayes' legal representative to remain in Court while the issues that I have noted above as to the validity of Mr Calabretta's appointment as receiver were determined. It is neither necessary nor appropriate that I address the suggested "misapprehension" of the facts which Mr Amirbeaggi attributes to me, beyond noting that (1) those facts have not been determined in Mr Calabretta's or YBL's favour, where the Plaintiffs chose to narrow their claim; and (2) any changes in YBL's structure that affected the validity of Mr Calabretta's appointment as receiver of Mr Harris' assets or the assets of HHC (as distinct from his appointment as receiver of Ms Harris' assets) would have had significant implications for the past conduct of aspects of these proceedings. In any event, even if I had been wrong in inviting Mr Hayes' legal representative to remain, Mr Hayes would be no less entitled to recover the reasonable costs of his solicitor in acceding to that invitation.
Mr Amirbeaggi alternatively submits the costs recoverable by Mr Hayes (presumably, for the period after he was excused from attendance) should be limited to an amount of $3,160, being the costs of Mr Mattiussi remaining at Court in a "watching brief" for a four hour period. I accept that the costs of only one solicitor representing the liquidator should be allowed for the period after the invitation for the liquidator's solicitor to remain in Court. Mr Hayes should recalculate those costs to include only the costs of one solicitor from the period in which he was represented in Court at the Court's invitation, in accordance with the orders that I make below. Mr Amirbeaggi also submits that the Court should apply a "broad brush" discount for the costs claimed by Mr Hayes and I have addressed the applicable principes above. I bear in mind that those costs are addressed by detailed evidence but have not been the subject of an assessment. I am satisfied that the 90% figure adopted in Mattiussi's quantification of solicitors' costs reflects an appropriate discount in that regard.
I have addressed the submissions made by Mr Calabretta in respect of the quantum of costs claimed by Mr Hayes above. As Mr Mattiussi points out, in submissions for Mr Hayes in reply to Mr Calabretta's submissions in chief, those submissions do not otherwise contest Mr Mattiussi's evidence in support of the liquidator's gross sum costs application or the manner in which those costs were calculated. I am satisfied that, with the variation noted in paragraph 38 and the discount allowed in Mr Mattiussi's quantification noted in paragraph 39 above, the Court can do justice to the parties in making a gross sum costs order in respect of Mr Hayes' costs, which will avoid the detriment of the further costs and delay of an assessment in these proceedings. A gross sum costs order should be made on that basis,
[5]
Orders
In summary, I have accepted that a gross sum costs order should be made in favour of the Plaintiffs as quantified by Mr See; and in favour of Mr Hayes as quantified by Mr Mattiussi, with the variation noted in paragraph 38 above. I direct the parties to submit agreed orders to give effect to this judgment, or, in default of any party reaching agreement as to orders, their respective orders by 4pm on 15 October 2024. It is not necessary to receive further submissions as to orders where their preparation will not raise any new issue.
[6]
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: 15 October 2024