De Rucci International Pty Ltd v Zhu and others

Determination

1. For the reasons identified in submission by counsel for the plaintiff / respondent, I propose to make an order for gross sum costs payable by the defendants to the plaintiff.
2. Section 98 of the Civil Procedure Act 2005 (NSW) provides a broad discretion to the Court to make an order for costs. Section 98(4)(c) provides for a court to make an order for a specified gross sum instead of assessed costs. In Hamod v State of New South Wales and Anor [2011] NSWCA 375 the Court of Appeal (per Beazley JA with whom Giles JA and Whealey JA agreed) considered the circumstances in which it might be appropriate to make such an order, at [813] - [820]:

"I have already set out the relevant provisions of s 98. The discretion thereby conferred upon the court is not confined and may be exercised whenever the circumstances warrant its exercise, having regard to the scope and purpose of the provision: Harrison & Anor v Schipp [2002] NSWCA 213; 54 NSWLR 738 per Giles JA at [21]-[22]. In Harrison v Schipp, Giles JA considered that the discretion in s 98(4) may be exercised where the assessment of costs would be protracted and expensive and, in particular, if it appeared that a party obliged to pay the costs would not be able to meet a liability of the order likely to result from the assessment. However, his Honour stated, at [22]: "The power should only be exercised when the Court considers that it can do so fairly between the parties, and that includes sufficient confidence in arriving at an appropriate sum on the materials available." See also Wentworth v Wentworth (Court of Appeal, 21 February 1996, unreported). The courts have typically applied a discount in assessing costs on a gross sum basis: Ritchie's Uniform Civil Procedure NSW , LexisNexis, Sydney, 2005 to date, " Civil Procedure Act ", at [s 98.65]; Charlick Trading Pty Ltd v Australian National Railways Commission [2001] FCA 629; Sony Entertainment (Aust) Ltd v Smith (2005) 215 ALR 788; Idoport Pty Ltd v National Australia Bank Ltd ; Lorenzato v Lorenzato & Anor (No 2) [ 2011] NSWSC 790 per Black J. In Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119; 135 ALR 160, von Doussa J noted that the specified gross sum costs procedure was particularly useful in complex cases, that the power must be exercised judicially and only after giving the parties an adequate opportunity to make submissions, and that before exercising the power the court should be confident that the approach taken to estimate costs is fair, logical and reasonable. The terms of s 98(4), together with the more general considerations reflected in the Civil Procedure Act , ss 56(1), 57(1)(d) and 60, suggest the factors that merit particular consideration include: the relative responsibility of the parties for the costs incurred (for example, Harrison v Schipp ); the degree of any disproportion between the issue litigated and the costs claimed; the complexity of proceedings in relation to their cost; and the capacity of the unsuccessful party to satisfy any costs liability: Ritchie's Uniform Civil Procedure NSW at [s 98.45]. The exercise of the power conferred by s 98(4) is particularly appropriate where the costs have been incurred in lengthy or complex cases and it is desirable to avoid the expense, delay and aggravation likely to be involved in contested costs assessment. This may arise either from the likely length and complexity of the assessment process: Beach Petroleum NL v Johnson (No 2) at 120; Charlick Trading Pty Ltd v Australian National Railways Commission ; Australasian Performing Rights Association Ltd v Marlin [1999] FCA 1006; or from the likelihood that the additional costs of formal assessment would disadvantage the successful party because of the likely inability of the unsuccessful party to discharge the costs liability in any event: Harrison v Schipp ; Sony Entertainment (Aust) Ltd v Smith (2005) 215 ALR 788 at [90], [194]-[195]; Hadid v Lenfest Communications Inc [2000] FCA 628. 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: Leary v Leary [1987] 1 WLR 72; [1987] 1 All ER 261; Sony Entertainment (Aust) Ltd v Smith; Microsoft v Jiang (2003) 58 IPR 445; [2003] FCA 101; Ritchie's Uniform Civil Procedure NSW at [s 98.60]). The assessment of any lump sum to be awarded must represent a review of the successful party's costs by reference to the pleadings and complexity of the issues raised on the pleadings; the interlocutory processes; the preparation for final hearing and the final hearing: Smoothpool v Pickering [2001] SASC 131. In the exercise of its discretion the court is not required to undertake a detailed examination of the kind that would be appropriate to taxation or formal costs assessment: Harrison v Schipp at 743; Hadid v Lenfest Communications Inc at [35]; Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR 1 at 5; [1999] FCA 673. The costs ordered should be based on an informed assessment of the actual costs having regard to the information before the court (for example, by relying on costs estimates or bills): Beach Petroleum NL v Johnson (No 2) ; Leary v Leary ; Harrison v Schipp at 743 ; Sparnon v Apand Pty Ltd (FCA, 4 March 1998, unreported) . The approach taken to estimate the costs to be ordered must be logical, fair and reasonable: Beach Petroleum NL v Johnson at 164-165 ; Hadid v Lenfest Communications Inc at [27]; Harrison v Schipp at 743 . This may involve an impressionistic discount of the costs actually incurred or estimated, in order to take into account the contingencies that would be relevant in any formal costs assessment: Leary v Leary at WLR 76 per Purchas LJ; Beach Petroleum NL v Johnson (No 2) at 123; Auspine Ltd v Australian Newsprint Mills Ltd at 164-165."

1. On the evidence, I am satisfied that the prospect of any recovery from the defendants of the costs involved in a formal costs assessment, if required, is limited. It appears that the defendants have not made any payments towards the judgment debt or previous costs orders made by this Court, and there is no reason to conclude that the situation will be different with respect to a usual costs order relevant to this most recent application. The plaintiff would thus be disadvantaged by an order requiring a costs assessment in circumstances where the prospects of recovery against the defendants may be remote.
2. The sum sought is established by appropriate evidence, and it incorporates a modest discount.
3. Significantly, that the plaintiff has incurred these costs at all is wholly attributable to the defendants' conduct of the matter. Simply stated, the Amended Motion argued on 21 June 2021 should not have been brought. It did no more than ask one judge of the Common Law Division to review the decision of another judge of the Common Law Division, where there was no evidence of any material change in circumstances, and where appellate proceedings were already on foot in the Court of Appeal concerning the substantive judgment. The plaintiff / respondent was needlessly put to the costs of defending an action which had no prospects of success.
4. That feature, coupled with those other matters to which I have referred, is determinative of the application in my view.

Orders

1. The orders that the Court makes are: 1. Order 2 of 15 June 2021 is vacated; 2. In lieu, the defendants are to pay the plaintiff a gross sum of $13,000 as costs of the proceedings with respect to the Amended Notice of Motion filed on 26 May 2021.

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