Excell Gray Bruni Pty Ltd v Grounds; Grounds v Excell Gray Bruni Pty Ltd

Category: Costs

Parties: Excell Gray Bruni Pty Ltd (Plaintiff)
Anthony Grounds (First Defendant)
Matthew Sheehan (Second Defendant)
R and M Rail Services Pty Ltd CAN 628 834 015 (Third Defendant)

Representation: Counsel:
Ms J Treherne (Plaintiff)
Solicitors:
Walsh & Blair Lawyers (Plaintiff)
No appearance (Defendants in 2023/00269787)
No appearance (Plaintiff in 2023/00440766)

File Number(s): 2023/00269787
2023/00440766

Publication restriction: Nil

Judgment

The application before the court

1. This is an application for a gross sum costs order, brought pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW) following the handing down of judgment by Weber SC DCJ on 18 February 2025 in two proceedings brought by these parties against each other. In proceedings 2023/00269787, judgment was given in favour of Excell Gray Bruni Pty Ltd in the sum of $316,264 against all three defendants. The first defendant’s claim against Excell Gray Bruni Pty Ltd in proceedings 2023/00440766 was dismissed. In addition to the gross sum costs order, the plaintiff also brings an application for an order for payment of interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW).

2. The procedural history of both actions has some complexities, so I will set the background to the litigation out in some detail. Before I do so, however, I note that the defendants in proceedings 2023/00269787 and the plaintiff in proceedings 2023/00440766 are not before the Court today.

The absence of the opposing parties

3. Each of the defendants (one of whom, the first defendant, brought proceedings against the plaintiff) was called outside the Court three times at 10:00AM, and there was no appearance. I note there was also no appearance by the defendants at the hearing before Weber SC DCJ on 18 February 2025.

4. As to the absence of a party, I note the provisions of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"), r 29.7, which are as follows:

(1) This rule applies when a trial is called on.

(2) If any party is absent, the court--

(a) may proceed with the trial generally or so far as concerns any claim for relief in the proceedings, or

(b) may adjourn the trial.

(3) If, in relation to a liquidated claim, the plaintiff appears, but a defendant does not appear, the court may, without proceeding to trial, give judgment against that defendant on evidence of--

(a) the amount then due to the plaintiff in respect of the cause of action for which the proceedings were commenced, and

(b) any payments made or credits accrued since the commencement of the proceedings in reduction of the amount of the plaintiff's claim or costs.

(4) If, in relation to any proceedings, the defendant appears, but the plaintiff does not appear, the court may dismiss the proceedings.

(5) Subrules (3) and (4) do not limit the court's powers under subrule (2).

5. The obligations placed on not only the parties present, but also the Court, require careful attention to the issue of whether the party or parties who are absent have been given appropriate information as to the hearing before the Court. I have satisfied myself, from examining the affidavits of service which are set out in the Court Book (which is Exhibit A in these proceedings), that the defendants have been made fully and appropriately aware of the hearing before the Court today and that they have been provided with copies of all relevant documentation. I note that the affidavit of service of Hayley Pritchard of 27 March 2025 (Exhibit A, tab 4) sets this out in full.

The application for a gross sum costs order

6. The evidence in relation to the gross sum costs order application relied upon by the plaintiff is as follows:

(a) The Court Book (Exhibit A), which contains a notice of motion filed on 7 March 2025 and two affidavits of Morgan Jones of 27 March 2025, as well as the affidavits of service. (b) I also note the contents of a judgment of Dicker SC DCJ in these proceedings on 18 February 2025, refusing an application by the defendants (or, at least, the first defendant) to vacate the hearing date: Excell Gray Bruni Pty Ltd v Anthony Grounds; Anthony Grounds v Excell Gray Bruni Pty Ltd [2025] NSWDC 43.

7. In this judgment, I have referred to Excell Gray Bruni Pty Ltd as "the plaintiff" or “EGB” and to the other parties against whom proceedings are brought as "the defendants", but that should be taken to include any matter that relates to the first defendant’s claims that were before the Court at various stages.

8. The circumstances leading to the bringing of this claim should briefly be noted; these are set out in the affidavit of Morgan Jones affirmed on 6 March 2025. Mr Grounds, the first defendant, was employed as a senior construction manager for EGB at a salary of $400,000 per annum. Substantial sums from company accounts to which he had access were found to be missing.

9. Upon discovering the fraud, EGB summarily terminated Mr Grounds' employment on 4 August 2024 and demanded the return of all company property. He failed to comply. Proceedings were commenced and injunctive relief was sought in the Supreme Court by way of freezing the assets of all the three defendants.

10. The fraud that was alleged against Mr Grounds in the Supreme Court of New South Wales was that he was using his senior position to authorise fake invoices for payment by EGB. Once authorised, payment would be made from the bank account of EGB to the bank account of Mr Sheehan and/or a company named “R & M” and payments were then remitted by Mr Sheehan and/or R & M to Mr Grounds.

11. The plaintiff obtained urgent injunctive relief in the Supreme Court of New South Wales against all three defendants after discovering the unauthorised payments by each of the defendants. Those proceedings, commenced on 24 August 2023 by way of a summons and supporting affidavits, set out the following:

(a) The first defendant, Mr Grounds, in the course of his employment with Excell Gray Bruni Pty Ltd ("EGB") had colluded with the second defendant (Mr Sheehan) to defraud money from the company, EGB; and (b) Mr Grounds, Mr Sheehan and the third defendant ("R & M") were in possession of money which is lawfully the property of EGB in the sum of $316,264.

12. The Statement of Claim filed on 22 September 2023 was followed by service of evidence in relation to the fraud allegations on 24 November 2023. That evidence was substantial, in that it consisted of over 900 pages of documentation, including all bank records necessary to prove that the defendants were in receipt of the moneys which had been taken from the company in circumstances asserted to be fraudulent.

13. Mr Grounds responded by bringing a Statement of Claim in the District Court at its Sydney registry, claiming he was owed unpaid wages and accrued annual leave entitlements by EGB. On 10 January 2024, EGB filed a cross claim seeking recovery of $13,994.82 for expenses relating to the termination of Mr Grounds and his failure to return company property. Mr Grounds served evidence on 26 April 2024, and evidence in reply was served on 30 May 2024 by EGB.

14. Eventually these proceedings were harmonised by the transfer of proceedings from the Supreme Court to the District Court so that they could be dealt with at the same time as the claim brought by Mr Grounds. On 25 March 2024, Judicial Registrar Howard ordered the proceedings to be heard together, so that the evidence in one could be the evidence in the other claim.

15. The progress of the claims by the parties was hampered by the fact that the solicitor on the record for Mr Sheehan and R & M filed a Notice of Ceasing to Act. They subsequently took no part at all in these proceedings.

16. Mr Grounds continued his claim and was granted several requests for an extension of time to serve his evidence in relation to the fraud matter, which he eventually did on 13 September 2024. That evidence was complex and essentially asserted that EGB was in some way complicit to the alleged fraud, which required the service of extensive evidence in reply, which was done promptly on 9 October 2024.

17. All of these matters were listed for directions on 13 August 2024, and both matters were listed for hearing on 19 November 2024, with an estimate of three days. Mr Grounds sought and obtained an adjournment of the hearing due to work commitments, and the hearing was relisted to 18 February 2025.

18. Mr Grounds' solicitors filed a Notice of Ceasing to Act, and Mr Grounds then sought to have the hearing adjourned, relying on a medical certificate alleging he was unable to attend any court hearings for four months starting from 12 February 2025.

19. On 18 February 2025, Dicker SC DCJ heard the application and set out a careful analysis of the defects in the medical evidence supplied. EGB opposed the adjournment because of the paucity of evidence, the history of prior indulgences and issues of prejudice. Dicker SC DCJ refused the application for adjournment and confirmed the hearing, but when the matter was transferred to Weber SC DCJ later that same day, none of the defendants were present.

20. After considering the evidence and giving reasons, Weber SC DCJ made the following orders:

THE FRAUD MATTER: EXCELL GRAY BRUNI PTY LTD v ANTHONY GROUNDS (2023/00269787)

1. Judgment for the plaintiff against the defendants jointly and severally in the sum of $316,264.

a) The defendants pay the plaintiff's costs.

b) That any freezing order currently in place in the proceedings continue until further order.

THE FAIR WORK MATTER: ANTHONY GROUNDS v EXCELL GRAY BRUNI PTY LTD (2023/00440766)

1. The plaintiff's claim be dismissed.

2. That there be judgment for the cross claimant against the cross defendant in the sum of $13,994.82.

3. That the cross defendant pay the cross-claimant’s costs.

21. It is by reason of the costs orders made that this application for a gross sum costs order was brought. The total costs incurred are set out in Mr Jones' affidavit.

The evidence concerning the gross sum costs order

22. I briefly note the matters relied upon to seek those costs pursuant to a gross sum costs order.

23. The Court's power to make a gross sum costs order is an essential part of effective case management, by the Court, conformably with s 56 of the Civil Procedure Act 2005 (NSW). The relevant principles of law have been set out for me by counsel for the plaintiff in her helpful submissions. I note in particular the observations of Beazley JA in Hamod v State of New South Wales [2011] NSWCA 375 at [816]-[817] and in Hancock v Rinehart (Lump Sum Costs) [2015] NSWSC 1640 at [56]-[57], where Brereton J set out the appropriate principles in relation to discounts being applied to the sum to be awarded, where the advantages of the accelerated process of a gross sum costs order is a factor to be taken into account.

24. The costs in question, which I understand to have been assessed on an ordinary basis, are as follows:

(a) In respect of the fraud proceedings, $90,717.44. (b) In respect of the Fair Work proceedings, $9,752.47. (c) In respect of this notice of motion: $9,598.00.

25. The proposed discount for these professional fees is 30%, and I note that, as is commonly the case in relation to disbursements, that discount does not apply to the disbursements. I note that consideration of the appropriate discount has been set out by Black J in In the Matter of Aquaqueen International Pty Ltd [2015] NSWSC 500 at [30].

26. For the Court to make orders for a gross sum costs order pursuant to s 98(4), the Court must be satisfied in relation to two factors:

(a) The matter is an appropriate one for the awarding of a gross sum costs order; and (b) The Court has sufficient information to enable a careful consideration of the quantum to be undertaken.

27. It must be stressed that the process of making a gross sum costs order is not akin to a costs assessment, and courts are entitled to take a relatively broad-brush approach to costs when carrying out this exercise. I am satisfied that each of the two requirements is amply made out here. First, there are substantial reasons for the making of such an order, which include the following:

(a) The nature of the proceedings, in that a substantial proportion of the legal costs relate to the obtaining of urgent injunctive relief in circumstances where money was fraudulently taken from the plaintiff by a senior employee in the course of holding a position of trust in circumstances where the issue essentially contested by Mr Grounds amounted to a question of his entitlements on departure from the company, as opposed to an attempted defence of the claim. Courts are entitled to be generous to the injured party where all the issues in the proceedings concern a party’s misconduct: Linjing Fang v Xiaodan Sun & Ors (No 2) [2014] NSWSC 1194 at [19]. (b) There is substantial evidence in the defendant's own case, as well as on the material put before me by the plaintiff that all of the defendants have an inability to pay any costs orders and hold at best minimal assets (see the affidavits filed by the defendant in relation to the freezing orders attached to Mr Jones' affidavit). (c) The dilatory conduct of the defence of these proceedings by all defendants has included failure to comply with court directions, last minute applications for an adjournment, failure to appear at the final hearing and the like, and I have regard in particular to the correspondence sent by Mr Grounds to the Court prior to his unsuccessful application to have the hearing date vacated on 18 February 2024.

28. Individually, each of the above grounds would be sufficient to warrant the making of a gross sum costs order, and collectively they are highly persuasive.

29. As to the quantum of costs, I have made a careful analysis of all of the professional fees involved, including an analysis of each of these with regard to each stage of the litigation, and I can be satisfied that the costs claimed have not only been genuinely incurred, but are reasonable and well within the parameters of costs charged in accordance with the CARC Supreme Court schedule for costs in Supreme Court and District Court proceedings. I also note the claims for interest which have been calculated for me by Ms Treherne in her submissions.

30. The orders sought by the plaintiff should accordingly be made, and I record these as follows:

EXCELL GRAY BRUNI PTY LTD v GROUNDS & ANOR (2023/00269787)

1. That pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW), the defendant's costs be paid by the plaintiff in the gross sum of $78,134.64.

2. That pursuant to s 100 of the Civil Procedure Act 2005 (NSW), the defendant be awarded pre-judgment interest in the sum of $27,050.92.

3. That the plaintiff's costs of this motion be paid pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW), in the gross sum of $8,080.

GROUNDS v EXCELL GRAY BRUNI PTY LTD (2023/00440766)

1. That pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW), the defendant's costs be paid by the plaintiff in the gross sum of $7,508.47.

2. That pursuant to s 100 of the Civil Procedure Act 2005 (NSW), the defendant be awarded pre-judgment interest in the sum of $1,025.72.

Injunctive relief

31. In the course of proceedings in the Supreme Court, orders were made for the preservation of assets. There is no information before me as to what orders were made in either the Supreme Court or this court prior to this costs application, but Ms Treherne told the Court she was instructed that these orders are still needed.

32. The power for such orders to continue after proceedings have been concluded as a power that would not lie with this Court if proceedings have been commenced here: Pelechowski v Registrar, Court of Appeal (1999) 198 CLR 435. This is one of a series of statutory gaps caused by the changing status of the District Court (another is the cumbersome cross-vesting laws: Quinn v Darling Downs Rugby Union Inc [2009] NSWDC 145).

33. Fortunately, the orders in this case were made in the Supreme Court of New South Wales, which then transferred these proceedings to this Court; consequently, the problems that this Court faces concerning the automatic termination of interlocutory basis of orders made under s 46 of the District Court Act 1973 (NSW) do not arise (cf Ashworth aka Otto v Nine Network Australia Pty Ltd (ACN 008 685 407); Otto (aka Ashworth) v Gold Coast Publications Pty Ltd; Otto v Dailymail.com Australia Pty Ltd (No 3) [2019] NSWDC 449 at [68] – [75]). However, whether or not there is a need for injunctive relief to continue after the litigation has ended, it is advisable for parties to consider what orders of this kind should be discarded and what should remain, as well as whether the court has power to do so; it is sometimes the case that the real battle begins after the litigation war is over.

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Amendments

14 April 2025

Case title - typographical error