[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
[2]
Judgment
THE COURT: This proceeding involved an application for leave to appeal which was refused on 23 February 2023: Gabrielle v Abood (No 3) [2023] NSWCA 29. The first respondent had obtained orders from the Supreme Court for the appointment of trustees for sale of a property she jointly owned with her brother, the applicant for leave to appeal, pursuant to s 66G of the Conveyancing Act 1919 (NSW). The second and third respondents are the trustees who had been appointed by the Supreme Court to effect the sale (the Trustees). The application for leave to appeal was refused and the Court ordered that the applicant pay the respondents' costs. The Trustees were represented during the course of the proceedings by a firm of solicitors, Grace Lawyers, one of whose number appeared at the hearing of the leave application. The Trustees now seek a gross sum costs order for their costs.
In the judgment addressing the application for leave to appeal, Kirk JA, with whom the other two members of the Court agreed, said the following:
[21] The second and third respondents - the trustees for sale - sought an order to the effect that their costs of this appeal be taken from the costs of sale of the property. The first respondent opposed that application, noting that order 3(d) made below provided that the trustees were to pay out of the proceeds of sale "the reasonable fees and costs for the Trustees for sale".
[22] The first respondent did not dispute that the second and third respondents had a legitimate interest in appearing in this application to seek to protect their position with respect to costs already incurred in the event that the application and appeal were successful. It is appropriate that the applicant should be ordered to pay their costs, following the ordinary course. But that interest does not warrant this Court making a specific order of the kind sought by the second and third respondents to alter the terms of, or predetermine the effect of, the regime put in place by the primary judge.
Fourteen days after the Court dismissed the application for leave to appeal, on 9 March 2023, the Trustees filed a motion said to be pursuant to r 36.16 of the UCPR seeking that order 2 - that the "applicant is to pay the costs of the first to third respondents" - be varied to read as follows:
The applicant is to pay the costs of the first to third respondents, with the costs of the second and third respondents specified as a gross sum of $14,419.25 pursuant to section 98(4)(c) of the Civil Procedure Act 2005 (NSW).
The motion also sought costs of the motion, assessed in the gross sum of $2,660.00 (an amount which includes disbursements).
The applicant is not represented. The Trustees' motion, a supporting affidavit of Mr Daniel Radman (the Trustees' solicitor), and written submissions of the Trustees, have all been sent to an email address that the applicant uses. There has been no response. Those materials have also been sent to the solicitors for the first respondent. Despite the position taken by the first respondent at the hearing of the application for leave to appeal, as referred to at [2] above, she has not opposed the orders sought by the Trustees.
The power to make a gross sum costs order provided by s 98(4)(c) of the Civil Procedure Act 2005 (NSW) is discretionary. Authority establishes that the discretion is not confined and may be exercised whenever the circumstances warrant its exercise; it should only be exercised when the Court considers that it can do so fairly between the parties, and that includes having sufficient confidence in arriving at an appropriate sum on the materials available; courts have typically applied a discount in assessing costs on a gross sum basis; and the court is not required to undertake a detailed examination of the kind that would be appropriate to taxation or formal costs assessment: see Hamod v New South Wales [2011] NSWCA 375 at [813]-[820] and authority there cited.
The Trustees argue that an exercise of the power here is warranted as:
1. The primary amount claimed, $14,419.25, is said to be a modest one, and the costs of assessment "are likely to be disproportionate to the amount that may be reasonably in issue on assessment";
2. the amount claimed "can be reasonably quickly assessed for reasonableness without the need of, and cost of, formal assessment";
3. the Trustees are in the process of selling the property in question, and if the applicant fails to pay the costs promptly then they can apply for a charging order of his share of the proceeds of sale.
These reasons are not altogether convincing. It appears odd to say that the costs of assessment are likely to be disproportionate but then claim, as the Trustees do, the not insignificant amount of $2,660.00 for the costs of making this application. As for the quickness of the assessment, that is true in the sense that the extent of legal work provided has been limited. However, the Trustees have been rather precise in the amounts they seek. They have sought 80% of most of their costs, 100% of the time spent on the day of the hearing of the application for leave to appeal (recorded as "Preparation and attendance at final hearing at Court of Appeal, email to client"), and all of their disbursements. There is a flavour of asking this Court to undertake its own detailed costs assessment in this approach, which is not the role of a court when making a gross sum costs assessment. As for the third reason, there is some tension between that reason and the decision of this Court not to order that the Trustees' costs of the application be taken from the costs of sale of the property. That being said, as noted, the first respondent has not opposed the orders now sought.
Although the reasoning of the Trustees is somewhat thin, were this Court to decline the request then presumably an assessment of costs would be required, requiring further expenditure of resources with respect to what is a relatively small costs claim, arising out of the sale of a house which was not a highly valuable property. In the circumstances, taking account of the interests of justice and the provisions of ss 56-58 of the Civil Procedure Act, this Court is prepared to exercise its discretion to undertake a gross sum assessment.
The Trustees, appropriately, played no active role in seeking to oppose or support the applicant's application for leave to appeal from the very orders which appointed them. The only interest they had was in ensuring that their costs position was protected in the event that the application was granted and the appeal upheld. Seen from that perspective, the identified expenditure of $15,422.00 on legal fees (excluding GST and disbursements) seems somewhat excessive. Further, the Trustees suggest a discount of 20% in relation to most of those fees, to reflect what might have occurred at a costs assessment, although, as noted, they seek 100% of the time spent on the day of the hearing. No evidence has been presented as to what sort of discount might have been expected if the matter had gone to costs assessment.
In this context it is appropriate to apply a somewhat more significant discount of 30%. Further, the Court is disinclined to parse individual time entries. The discount should be applied to all of the professional costs sought with respect to the application for leave to appeal (leading to a figure of $10,795.40). That discount should also be applied to the costs of the motion now before the Court (leading to a figure of $1710.80), noting that the costs of seeking a gross sum assessment can also be assessed on a gross sum basis: see eg Ahern v Aon Risk Services Australia Ltd (No 2) [2022] NSWCA 39 at [46]. The Trustees are also entitled to be reimbursed for the identified disbursements ($1,130.25 on the application for leave to appeal and $705.86 on the gross sum motion). Adding those figures together leads to an amount of $14,342.31, which will be rounded down to $14,300.00. By way of context, the total amount claimed by the Trustees on the gross sum application was $17,079.25.
The Trustees sought that the costs order made by this Court on 23 February 2023 be varied. There is no need to do so. It is sufficient to make an additional order specifying the costs sum now assessed.
The order of the Court will be as follows:
The costs of the second and third respondents are assessed, pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW), in the gross sum of $14,300.00 (which amount includes the costs of applying for this gross sum costs order).
[3]
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Decision last updated: 19 May 2023