Davis v Viglianti

Interest

1. In the judgment of the court, damages were assessed as a consequence of the tortious conduct of the defendant in the sum of $444,596.
2. The plaintiff is entitled under the general law to interest on the heads of damage that were awarded to him.
3. The relevant time period was initially 1,615 days from the commission of the tort, or 231 weeks. The plaintiff is content with this claim and does not seek the additional interest which has been accruing as a result of the adjournments.
4. Accordingly, interest should be awarded as follows: General damages: $80,000 An award for interest should be made at 2% on so much of the general damages that properly reflects the past, which the plaintiff would submit would amount to a sum of $60,000 at 2% thus a sum of: $5,309 Interest on past compensatory damages excluding exemplary damages ($294,285) at 4%: $52,084 TOTAL: $57,393
5. The sum of $57,393 should be awarded by way of interest on damages for the past thus a final judgment in the sum of $501,989.00.
6. No interest is to be awarded on exemplary damages.

Lump sum costs

1. The plaintiff brings an application for a gross sum costs order under s 98(4) Civil Procedure Act 2005 (NSW) and relies upon the principles set out in Zepinic v Chateau Constructions (Aust) Ltd (No. 2) [2014] NSWCA 99 at [31] and [38]; Hamod v New South Wales (No. 13) [2009] NSWSC 756 at [31], [819] - [820] and Young v Hones (No. 3) [2014] NSWSC 499 at [28]-[30].
2. Any application for a gross sum costs order involves a two-step process. First, the court must be satisfied that the matter is an appropriate one for such an order. Second, the court must be satisfied that quantum can be established.
3. While the practice of awarding such costs has increased substantially in the last decade, the court has a substantial discretion in costs matters. This discretion must be exercised judicially, and the power to make a gross sum order should be exercised only if the Court finds it fair and equitable in all the circumstances of the parties and the case (Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 at [21]-[22]). Despite the provisions of s 56 Civil Procedure Act 2005 (NSW), resort to the s 98 powers should not be "too quick": Bobb v Wombat Securities Pty Ltd (No 2) [2013] NSWSC 863.
4. This is the case even in jurisdictions such as the Federal Court of Australia, where there is a stated preference for gross sum costs orders in the Costs Practice Note. In Paciocco v Australia and New Zealand Banking Group Ltd (No 2) [2017] FCAFC 146; (2017) 253 FCR 403, the Full Court said (at [19]-[20]): "[19] Whilst the Costs Practice Note now suggests that most cases should have a lump sum costs order approach applied unless there is some characteristic that would make it unsuitable, a lump sum costs order is not mandated in all instances. In all cases it is a matter for the Court to exercise the discretion given to the Court by the Federal Court Act and the Rules as appropriate: see Sigalla at [18]-[19]. [20] There is no particular characteristic that a case must possess for it to be suitable for the making of a lump sum costs order. Particular circumstances that may make a lump sum order especially appropriate include where in a large and complex commercial matter it would save the time, trouble, expense and aggravation of a taxation; where a taxation would require the parties to consume additional time and incur additional expenditure prolonging already protracted litigation; and generally to avoid an ongoing, counter-productive dispute as to costs, in the interests of achieving finality."
5. Gross sum orders may be made when the assessment process would be protracted and expensive, or if it appears that the party obliged to pay costs would not be able to meet a liability of the order likely to result from the assessment. That is not the case here. However, there is a wide discretion to make such orders in a variety of circumstances and, but for the absence of compliance with the second step, I would have made such an order.

The need to quantify the gross sum of costs sought

1. As the second step in the two-stage process, the Court must have confidence, on the documentary evidence before it, that an appropriate gross sum can be arrived at: per Garling J in Young v Hones (No 3), at [25]-[30]. A good example of the kind of evidence provided on such an application may be seen in Accor Australia & New Zealand Hospitality Pty Ltd v Liv Pty Ltd (No 3) [2018] FCAFC 231, where a lump sum amount (of which $449,520.42 related to hearing costs, with the rest appertaining to the appeal) was quantified by a costs consultant who clearly identified how this sum was arrived at, with appropriate adjustments for solicitor/client and adjustments in accordance with the formulae generally applied.
2. Unfortunately, both the sum and the manner in which it is assessed represent a considerable problem in the present case.
3. The plaintiff's submissions started with the proposition that the court, based on its own experience, is entitled to form a view as to what is an appropriate sum for costs in a hearing such as the present, and that as the trial judge I am best placed to determine them. It is certainly preferable for the trial judge to determine such issues, as the Full Court of the Federal Court noted in Accor Australia & New Zealand Hospitality Pty Ltd v Liv Pty Ltd (No 3) at [13]. However, judges are not costs assessors, and the onus on the party seeking the order is to satisfy both limbs of the requirements set out in s 98(4) by providing documentation to the appropriate standard.
4. The first problem with the documents handed to me is the differing totals provided for gross sum costs. The plaintiff initially claimed that professional costs and disbursements, including counsel fees incurred to date, were "approximately $150,000" (the sum identified in the first set of submissions). This estimate came with the proviso that, if the matter proceeded to assessment and full itemisation, it was likely that that sum would be higher.
5. As no costs documentation was provided on the first occasion this application came before me, I asked counsel for the plaintiff if any memorandum of costs had been provided. I was then shown a memorandum of costs sent to the plaintiff for $42,279.05, for costs on a solicitor and client basis, excluding counsel's memoranda and disbursements.
6. I have now been provided with an affidavit sworn by the solicitor which attaches counsel's fees and a second bill to the plaintiff dated 22 December 2017 for $54,675.87. However, the estimate set out in Mr Zreika's affidavit does not refer either to the 2017 bill for $54,675.87 or the 2018 bill for $42,279.05 and instead claims costs as follows: 1. Solicitor/client component - $50,000 2. Party/party costs - $80,000 3. Counsel - $75,300.87 4. Disbursements - $13,560.57 5. Interest on costs - $57,393 Total: $276,254.02
7. The next problem is that there are two types of adjustments (both of which were carefully set out in the evidence in Accor Australia & New Zealand Hospitality Pty Ltd v Liv Pty Ltd (No 3)) that need to be made to this total: 1. The first is the issue of whether the costs should be assessed on an ordered or on an indemnity basis. 2. The second is that there should be a reduction on a percentage basis to take into account any of those costs that may be disallowed or otherwise reduced on assessment, given the plaintiff has the benefit of avoiding the lengthy and protracted costs assessment regime.
8. As to whether or not indemnity costs should be ordered, I note that a Calderbank offer was sent on 22 December 2017, after judgment was handed down. It does not comply with the requirements for a Calderbank offer on any basis. If the intention was to rely upon it in seeking indemnity costs for the gross sum costs order application, its contents are so briefly phrased that it would not have been reasonable to expect the defendant to accept it.
9. The alternate basis for indemnity costs was the hopelessness of the defence. While the defendant's case was not a strong one, it was not so hopeless that indemnity costs should be ordered. He gave his side of the story and, while I was not satisfied he was a witness of truth his conduct of the proceedings, this does not amount to conduct of the kind warranting an order for indemnity costs.
10. Another factor raised by the plaintiff's solicitor, when the matter was last before the court, was the delay in bringing this application. I have very little information about the reasons for delay beyond the correspondence attached to Mr Zreika's affidavit, which suggests that the blame for the delay of a year in bringing this application lies on both sides.
11. Accordingly I propose to order that costs be paid on the usual, rather than the indemnity, basis.
12. As to the second adjustment to be made, I note that a deduction to allow for the likelihood of deductions on assessment has been made, although it would appear that this has been prepared on the basis of indemnity costs being awarded. In addition, the mathematics of the percentage reduction are unclear.
13. The next problem is one of quantum. While I was previously provided with a fully itemised account dated 9 November 2018 for $44,279.05 which was sent to the client, Mr Zreika's affidavit attaches a bill dated 22 December 2017 for $54,675.87. Was the plaintiff given a reduction and, if so, why and what for? None of this is clear from the documentation.
14. Even the total Mr Zreika sets out in the text of his affidavit as the final figure is confusing. I have no explanation for the split he makes in ordered and solicitors' costs, no explanation of the basis for the interest claim (the figure of $57,393 is interest on the judgment, not interest on costs - is there a claim for interest on costs?) and I have two different itemised bills, neither of which corresponds to the figures given by Mr Zreika in his affidavit. I cannot be confident that these figures accurately represent the costs.
15. Where a party seeks a gross sum costs order, there needs to be careful particularisation of the sums in question. Courts are cautious in this regard because the court is circumventing the costs assessment process. In Ghosh v Miller (No 2) [2018] NSWSC 713 Fullerton J refused to make a gross sum order in similar circumstances.
16. In view of the uncertainties in the calculation of the gross sum sought, I propose to exercise the same caution as that shown by Fullerton J. It will be no hardship for the plaintiff's solicitors to send their file and draft bill to a costs assessor, and the procedures for assessment will no doubt iron out all of these uncertainties.

The asset freezing order

1. The court continued a freezing order, being Order 3, on 15 December 2017. The plaintiff seeks a variation of that order so as to read: "Save and except for any lawful means open to the plaintiff by which it may enforce the judgment of this court, being enforcement to recover the final judgment in favour of the plaintiff to recover damages against the defendant as well as interest and costs, the freezing order originally made by this court on 10 October 2017 is continued until further order, or until such time as the plaintiff notifies the defendant within 7 days that the judgment sum, including interest and costs, has been paid. Alternatively upon notification by the plaintiff or his legal representatives to the court in writing."
2. No opposition to this order was notified during the period given for submissions in reply.
3. The facts in this case illustrate the difficulty and expense caused by the limited jurisdiction this court has to make freezing orders once the proceedings are concluded. The precise parameters of this court's powers to make orders of this kind is one of a series of jurisdictional uncertainties both in legislative and judgment-based law: Mahommed v Unicomb [2017] NSWCA 65. Ancillary orders of the kind I made in my previous judgment end with the handing down of judgment. Mr Baran tells me that his client will seek an undertaking to comply with the current freezing order and that if there is no agreement to do so, his client will approach the Supreme Court. Accordingly, I do not propose to make any further orders.

Orders 1. Judgment for the plaintiff varied to include interest, making a total of $501,989.00. 2. Plaintiff's application for indemnity and gross sum costs refused; defendant pay plaintiff's costs on the ordered basis. **********​ 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: 12 June 2019