Solicitors: Pope & Spinks(Plaintiff)
Norton Rose Fulbright (Defendant)
File Number(s): 2016/247422
[2]
EX TEMPORE Judgment - REVISED
I am dealing with the defendant's application for a gross sum costs order under the provisions of s 98(4)(c) of the Civil Procedure Act 2005 (NSW). The application was foreshadowed following the adjournment of the hearing of this matter on 3 April 2019. I will not revisit the circumstances in which the plaintiff moved the Court at the last minute for an adjournment of a hearing with an estimate of three weeks, which had been set down a considerable time earlier. They are fully discussed in my judgment of 3 April 2019 reported as [2019] NSWSC 387 on Caselaw. In that judgment (at [25]), having ruled that the interests of justice required the adjournment, I said:
However, the adjournment cannot be without cost or consequence. Ordinarily the plaintiff must bear the costs thrown away by reason of this late application.
That is an unexceptionable statement of the inevitability that, when an adjournment is granted, effectively, as here, by way of an indulgence, the party obtaining the indulgence must bear and pay the costs wasted by reason of the adjournment. At that time I indicated that I would consider any application for a gross sum costs order that may be brought forward.
The costs sought in the motion are comprised of three parts: First, there are the wasted costs occasioned by the adjournment; secondly, there are the costs of preparation specifically necessary to resist the adjournment application; and thirdly, there are the costs of this application. The application is supported by the affidavit of the defendant's solicitor, Ms Ganga Narayanan, affirmed on 10 April 2019. Ms Narayanan is a partner at Norton Rose Fulbright and she has personally prepared the affidavit and the exhibit which contains a detailed schedule breaking down the costs sought, and provides substantiation of the amounts claimed by way of disbursements, including for the fees of senior and junior counsel.
I have also had the benefit of the affidavit of Ms Lililane Dlakic, the wife of the plaintiff, sworn on 12 April 2019. With leave, Ms Dlakic appeared before me to make the adjournment application and, I interpolate, seeks to be appointed her husband's tutor for the proceedings. The substantive content of that affidavit is to bring me up-to-date with the progress of the Equity Division proceedings which are referred to in my previous judgment. The relevance of those proceedings to this application is that Mr Dlakic has every expectation of coming into a substantial sum of money, measured at least in hundreds of thousands of dollars, as the fruits of that litigation. However, the litigation is not yet finalised. There may well be yet a reference to a referee to determine quantum issues and there is certainly a further decision about those matters awaited from Robb J, who has taken time for consideration since 4 April 2019, when there was a hearing before him. Required written submissions were lodged with his chambers on 8 April 2019.
That matter is relevant because, from the material before me when the matter was adjourned it is evident that the prospect of Mr Dlakic satisfying an order for costs is entirely dependent upon the successful outcome of those proceedings. Mrs Dlakic also referred to other matters, including her continuing desire to be appointed tutor and the steps she has taken since the matter was last before me, on behalf of her husband, to attempt to find ongoing representation for these proceedings.
Ms Nolan, of counsel, who appears for the plaintiff today, opposes the application for the costs order. She has provided me with a recent decision of Black J dealing with the principles informing the exercise of the Court's power to make a gross sum costs order. That is the decision of In the Matter of Ji Woo International Education Centre Pty Limited [2019] NSWSC 338. His Honour referred to earlier authorities which the principles, including the well-known judgment of Hamod v The State of New South Wales [2011] NSWCA 375, where Beazley JA (as the former President then was), summarised relevant factors.
Her Honour, with respect, did not purport to do so exhaustively. But she indicated that s 98(4) is particularly appropriate "where the costs have been incurred in lengthier complex cases and it is desirable to avoid the expense, delay and aggravation likely to be involved in contested costs assessment". Her Honour also referred to 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.
Black J also referred to the decision of Gleeson J of the Federal Court of Australia in Yeo v Australian Securities and Investment Commission (No 3) [2018] FCA 1749. Those proceedings were related to the proceedings before Black J. Her Honour, like Beazley JA, also emphasised the desirability of avoiding the expense, delay and aggravation involved in taxation of costs in the Federal Court, or assessment in State jurisdiction. Her Honour referred to the need for the court to be satisfied that any gross sum costs order is made on the basis of a logical, fair and reasonable estimate of the costs involved. The court should be astute to avoid both overstating the recoverable costs and underestimating the appropriate amount by applying some arbitrary discount. Of particular interest in the current situation, her Honour said:
It would be completely pointless if the evidence produced in a lump sum application was the same as the evidence in a taxation process. The object of avoiding the need to adduce all that evidence is to save the time and costs of the parties and the public's resources.
Although these authorities refer to complex and lengthy litigation, I do not regard that as the only circumstance in which s 98(4)(c) is engaged. It is obviously often particularly apposite in smaller cases where the amount involved can be easily ascertained and ordered by the court, rather than subjecting the parties to disproportionate expense, delay and aggravation by requiring formal assessment. It seems to me that, in the end, the question about whether a gross sum costs order is appropriate really depends upon the interests of justice in all the circumstances of the case.
Ms Nolan very helpfully made submissions in relation to the appropriateness of making an order in this case and made criticisms of the nature of the material that I have been given to work with, to argue that a general order of the familiar type should be made, leaving the question of any assessment until the conclusion of the proceedings which are, on one view, substantially ready for trial. I must say, however, with great respect to counsel, that I am in agreement with Gleeson J's observations that the Court is not to proceed like an assessor with the same type of material that an assessor would have before him or her in making a formal assessment under the Act.
I am satisfied that in this case it is appropriate to make a lump sum costs order. The circumstances which persuade me that that is so are these: First, the costs are not complex or, in the overall scheme of things in litigation these days, very high. Secondly, the circumstances in which the adjournment was obtained are such that the considerable indulgence that was granted should result in the disadvantage to the defendant being adjusted sooner rather than later. Thirdly, it is clear from what Ms Dlakic told me on the last occasion, that absent the proceeds of the equity litigation, she and her husband would not be in a position to satisfy a costs order.
That being so, I am of the view that the defendant should be saved the time, expense and aggravation of an assessment and should also be saved the risk, if assessment must abide the outcome of the litigation, that the proceeds of the equity proceedings will either be eaten up in the conduct of the case on behalf of the plaintiff, utilised to pay other debts or otherwise expended in the course of what may well be legitimate expenses of the household. To my mind, that would be unsatisfactory in all the circumstances of the case and I am persuaded that a gross sum costs order is appropriate.
I should not be taken as suggesting that the submissions made criticising the approach taken to the assessment of the costs were not properly made. However, looking at the matter overall, I am satisfied that Ms Narayanan is an experienced litigation lawyer, well placed to judge and accurately estimate the costs incurred in defending a case like this. I have considered the hourly rates that she says in her affidavit lawyers of different grades within her pod are charged out at and I am satisfied that they are reasonable, to the point of modesty. I have also considered the rates charged by senior counsel, who is very experienced in the field, and by the experienced junior counsel. In my judgment, they are proper rates for counsel in litigation of this type of the experience of Mr Sexton and Mr Neil. Indeed in fairness, Ms Nolan did not criticise those rates in any way.
I accept that a broad brush needs to be brought to bear and that there may be matters which have been claimed which, perhaps on an assessment, would either be disallowed, or to say the same thing another way, would be put into the solicitor/client category, instead of the ordinary category. But having gone through it carefully with the benefit of Ms Nolan's submissions, there is very little I can see that could possibly fall into that category and, in my judgment, the approach taken by Ms Narayanan is appropriate.
I do bear in mind that, because of the type of issues that Ms Nolan has raised, it is often appropriate, as Black J said in Ji Woo at [29], to make a discount from the figure assessed as a starting point before making a gross sum costs order. There is no fixed rate of discount or usual practice. In his typically, with great respect, thorough and comprehensive manner, his Honour has given examples of the different levels of discount applied in various cases. His Honour was of course sitting in the Corporations List and referred to the discounts applied in liquidator litigation.
I am impressed by the consideration that Ms Narayanan seems to have taken a frugal approach to the assessment and it seems to me that an appropriate discount in the present case is one of 20%. Accordingly, I am satisfied that I should make an order of the type sought. The costs as assessed informally by Ms Narayanan total $82,106.82. Taking the broad brush, I will round that down to $82,000 and deduct, as I have said, 20% which is $16,400. I will assess those costs in the sum of $65,600.
The next question which arises relates to whether there should be a stay of the proceedings until the costs order I will pronounce, is satisfied. Ms Nolan has argued in that regard that the stay would stultify this litigation, which is very substantially ready for trial; from Ms Dlakic's affidavit, I should be satisfied that she is making every endeavour to obtain legal representation, who will, if I can put it this way, stay with the case until the case is over. Subject to her making an application to be appointed tutor, which on the basis of Dr Pilsky's reports, which have been tendered as exhibit A, seems to have some prospect of success, and I assume, updating the psychiatric evidence in the case, which seemed to me to be somewhat out-of-date when I reviewed the material on 3 April, the case can properly take a date.
Moreover, there are good prospects I am satisfied, in the medium term at least, of receiving some of the fruits of the equity litigation from which these costs can be paid. At this stage I am not prepared to stay the proceedings. I am proceeding on the assumption that competent lawyers will be retained and remain with the case and that the equity proceedings will bear fruit within a matter of months, following which the costs order I will pronounce, will be promptly satisfied.
I will reserve liberty to the defendant to apply for a stay, if the order remains unsatisfied beyond a period, as I have said, of some months. I cannot be more precise than that and must leave it to the good judgment of those involved as to whether a further application should be made
I make the following orders:
1. Under section 98(4)(c) of the Civil Procedure Act the plaintiff is to pay the defendant's costs thrown away by reason of the adjournment of the hearing fixed to commence on 8 April 2019, the costs of the plaintiff's notice of motion filed on 2 April 2019 and the costs of the defendant's notice of motion filed on 10 April 2019 in the gross sum of $65,600.
2. List the matter for further directions before the Common Law Case Management Registrar at 9am on 10 July 2019.
3. Reserve liberty to the defendant to apply for a stay until the costs order is satisfied in the event of undue delay.
[3]
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Decision last updated: 08 May 2019