HIS HONOUR: The plaintiff, Sing Kian Gan, and the defendant, Shop 3, 228-230 Hanvaylee Parade Kensington Pty Ltd, were tenant and landlord, respectively, of premises which operated as a restaurant at Shop 3, 228-230 Hanvaylee Parade, Kensington ("the premises").
The plaintiff became the tenant when, on 15 March 2012, a registered lease under the Retail Leases Act 1994 (NSW) ("the RLA") ("the lease") for the premises was assigned from the former tenant, Kaki Kima Restaurant Pty Ltd, to the plaintiff.
The lease was for a period of five years commencing on 25 April 2009 and terminating on 24 April 2014. There was an option for renewal for an additional five year term.
The option to renew the lease was exercised by the plaintiff, by a letter dated 24 February 2014. The defendant confirmed the plaintiff's exercise of that option. However, in the circumstances which then unfolded, on 24 July 2014, the defendant terminated the plaintiff's lease of the premises by re-entry.
The termination of the lease was the genesis of proceedings brought by the plaintiff and the defendant under the RLA before the Consumer and Commercial Division of the NSW Civil and Administrative Tribunal ("the Tribunal"): see, as to the jurisdiction of the Tribunal sitting in that Division, s 16(1)(b), Sch 1 Pt 1cl 13(2)(a) and Sch 4 Pt 3 of the Civil and Administrative Tribunal Act 2013 (NSW) ("the CAT Act"). Both parties brought, what was described in their originating processes as a "retail leases application" pursuant to s 71(1) of the RLA on 20 July and 11 September 2015, respectively.
The Tribunal constituted by Principal Member, Mr D Patten, delivered its decision with respect to the applications on 20 April 2016: Gan v Shop, 228-230 Hanvaylee Parade Kensington Pty Ltd [2016] NSWCATCD (unreported, decision dated 20 April 2016) ("Gan No 1"). The application by the plaintiff was dismissed. The application by the defendant was granted, in part, and an order for $19,696.47 was made against the plaintiff.
The plaintiff filed a notice of appeal against the decision of the Tribunal constituted by the Principal Member on 26 April 2016. That was an internal appeal brought under Pt 6 Div 2 of the CAT Act (the matter was within the internal appeal jurisdiction of the Tribunal pursuant to s 32(1)(a) of the CAT Act).
By a decision made by the Appeal Panel on 13 September 2016, constituted by two senior members of the Tribunal, Mr P Durack SC and Mr J McAteer ("the Appeal Panel"), orders were made dismissing the appeal: Gan v Shop 3, 228-230 Hanvaylee Parade Kensington Pty Ltd [2016] NSWCATAP 210 ("Gan No 2").
By a summons filed on 8 November 2016, the plaintiff sought leave to appeal the whole of the decision of the Appeal Panel. Whilst not specifying the provisions of the CAT Act relied upon to bring the appeal, the nature and form of the appeal conveyed that it was brought under s 83(1) of the CAT Act.
By a judgment delivered 29 September 2017, the Court refused leave to bring the appeal. The plaintiff was found to have successfully identified questions of law with respect to grounds 3 and 7 and, in some respects, 4, 5 and 6, but had failed to establish a proper basis for the grant of leave to appeal.
The Court recorded that no submissions were advanced by the plaintiff in support of grounds 1 and 2 of the appeal (and consequently did not make submissions in that respect). Ground 2 was merely a general or catch all ground, challenging the dismissal of the plaintiff's claim. Without more, it was devoid of any real content. Ground 1 concerned the assessment of damages to the defendant (and costs) and did not raise a question of law.
As to the question of costs, the Court made orders and directions as follows:
Within 28 days of the publication of this judgment, the defendant shall file and serve any application for costs and a short submission in support of the same. The plaintiff shall reply by written submissions filed and served no later than 28 days thereafter. In the absence of any request for an oral hearing on costs, the Court shall decide the question without further sittings upon the written submissions filed by the parties.
In accordance with those directions, the defendant filed an application as to costs and short written submissions, in respect of same, on 26 October 2017. The plaintiff filed submission in reply on 6 November 2017.
The application in relation to costs was as follows:
Pursuant to Civil Procedure Act s 98(4)(c) the defendant pay the plaintiff's costs in the specified gross sum of [$46,575 or such other lump sum amount as the Court determines].
No party sought the matter to be listed for oral hearing. Hence, that issue is to be determined upon the written submission of the parties.
This judgment concerns that application for costs.
[3]
RELEVANT PRINCIPLES
The general rule as to costs is set out in s 98 of the Civil Procedure Act 2005 (NSW) ("CPA") and Pt 42 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"), namely, that costs follow the event.
Section 98(4) of the CPA relevantly provides:
(4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to:
(a) costs up to, or from, a specified stage of the proceedings, or
(b) a specified proportion of the assessed costs, or
(c) a specified gross sum instead of assessed costs, or
(d) such proportion of the assessed costs as does not exceed a specified amount.
The principles regarding s 98(4) are referred to Hamod v New South Wales [2011] NSWCA 375 at [813]-[820] (per Beazley JA, with whom Giles and Whealy JJA agreed). The relevant part of that judgment is extracted below:
[813] 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."
[814] 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.
[815] 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.
…
[817] 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.
[819] … 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.
[820] 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.
The defendant placed reliance upon the principles informing the discretion to make a lump sum costs order set out in Sedgwick v Varzonek (No 2) [2015] NSWSC 1613 and in Sedgwick v Varzonek (No 3) [2015] NSWSC 1982 (per Slattery J). Two principles concerning the operation of s 98(4)(c) which may be extracted from those judgments are as follows:
1. Although s 98(4)(c) has been described as particularly suited to complex litigation, the rule is expressed in general terms and is not limited to the cases of that type: Australasian Performing Rights Association Ltd v Marl [1999] FCA 1006 at [3] (Burchett J). The power to award a gross sum order under s 98(4)(c) instead of assessed costs is exercised whenever the circumstances warrant its exercise; the purpose of the rule is to avoid the expense, delay and aggravation arising out of taxation: Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119.
2. The Court has an unconfined discretion under s 98(4): "the Court may make an order…" [emphasis added] including a lump sum costs order. Cases such as Harrison v Schipp [2002] NSWCA 213; 54 NSWLR 738 and Hadid v Lenfest Communications Inc [2000] FCA 628 make clear that lump sum costs orders are not limited to existing categories of case but may be made where the circumstances require: Sedgwick v Varzonek (No 3) at [9].
[4]
Submissions of the Defendant
The defendant made the following submissions:
1. That the unsuccessful plaintiff should pay the defendant's costs ought not be in dispute, pursuant to r 42.1 of the UCPR.
2. That an additional order be made as to costs awarded as a specified lump sum, pursuant to s 98(4)(c) of the CPA for the following reasons:
1. First, the plaintiff is unlikely to be able to pay the defendant's costs as assessed; the plaintiff has committed an act of bankruptcy and will shortly be served with a creditor's petition.
2. Secondly, there may be "further aggravation" of irrecoverable costs arising from a costs assessment, as the plaintiff had demonstrated a willingness to propound hopeless and misconceived actions and arguments.
1. The plaintiff for example had sued a foreign bank (with no presence in this jurisdiction) in this Court to re-litigate a case he had lost in a foreign jurisdiction.
2. Some of the purported grounds of appeal put forward by the plaintiff in these proceedings were erroneous.
3. The plaintiff considers himself a capable "bush lawyer", and could inflict considerable costs, as the opponent would be forced to "translate"' vague and incoherent claims and arguments into a comprehensible and justiciable legal framework. This Court's judgment revealed the effort required. A bush lawyer who becomes bankrupt and is, therefore, impervious to any costs sanctions is an even more dangerous litigant.
4. The plaintiff has automatic rights to a review by a Review Panel and then a right of appeal to the District Court on an issue of law offered by the costs assessment regime provide an expansive opportunity for the plaintiff to inflict further irrecoverable costs.
5. The "further aggravation" of irrecoverable costs of a costs assessment application will likely itself be "further aggravated" by the plaintiffs conduct of the assessment proceedings, which include rights of review and of appeal.
1. Thirdly, the plaintiff, as a Malaysian national, may decamp the jurisdiction and avoid service of a costs assessment application or other enforcement process.
2. Fourthly, the defendant had endured a hearing before a single member of NCAT, a hearing before the Review Panel of NCAT and a full day's hearing before the Supreme Court of New South Wales. The defendant ought be spared further irrecoverable costs by the Court making a lump sum costs order for $46,575 or such other amount as the Court determines is fair.
The defendant relied on the affidavit of Anthony John Khalil Herro sworn 26 October 2017. The derivation of the amount of specified lump sum costs sought is explained in Mr Herro's affidavit. The affidavit of Mr Herro provided details regarding the plaintiff's bankruptcy circumstance as well as an estimation of the quantum of costs incurred to date. Mr Herro then discounted the estimated quantum of costs amount by 20% as a result of solicitor client work which, he noted, would not be recoverable on a party-party basis.
[5]
Submissions of the Plaintiff
The plaintiff's submissions in reply were as follows:
1. The Court has found that the plaintiff's appeal raised fairly arguable questions of law for the consideration of this Court. In the judgment on 29 September 2017, the Court found the plaintiff had successfully identified questions of law in relation to grounds 3 and 7 and, in some respects, 4, 5 and 6.
2. The costs should follow the event.
3. The plaintiff agrees with the defendant's cost order that costs be awarded as a specific lump sum, pursuant to s 98(4)(c) of the CPA.
4. As to Mr Herro's affidavit, the plaintiff submitted:
1. In relation to the bankruptcy proceedings, the plaintiff did not owe the alleged amount in the Bankruptcy Notice, in light of grounds 3 and 7 in Gan v Shop 3, 228-230 Hanvaylee Parade Kensington Pty Ltd [2017] NSWSC 1322.
2. The litigation against a foreign bank is irrelevant to this matter.
[6]
CONCLUSION
There is an overwhelming case for the award of costs in this matter based upon the principle stated in r 42 of the UCPR that costs will follow the event. No contrary submission was advanced by the plaintiff. Leave was refused for all grounds of the appeal, bought by the plaintiff. Notwithstanding questions of law having been raised with respect to some grounds, no ground was made out.
I also consider the defendant has established a proper basis for a gross sum costs order rather than an assessment of costs. Again, the plaintiff does not dispute such a determination. However for more abundant caution, I would note that in reaching that conclusion I have also accepted the defendant's grounds for the same, as summarised at [17(2)] above (the first and second contention so far as it is supported by summarised sub-grounds (a) and (b), (ii), (iv), and (v).
No dispute was raised by the plaintiff as to the receipt of evidence from the defendant. The plaintiff did not dispute that bankruptcy proceedings are afoot but challenged the amount appearing within the "Bankruptcy Notice" when compared with the evidence in these proceedings as to non-payment. The evidence gives ample basis for the first contention (I do not accept that the trustee in bankruptcy is unlikely to accept proof of debt in the absence of a certificate of determination after a formal assessment). Given the course of the proceeding in the Tribunal and this Court, there is ample basis to the second contention that there will be irrecoverable costs from an assessment process.
Finally, I consider, having regard to the aforementioned principles as to the ruling of a gross sum that, on the evidence before the Court, the amount claimed by the defendant, represents a logical, fair and reasonable amount after allowing for appropriate discounts.
[7]
DIRECTION
The defendant shall bring in short minutes of order reflecting this judgment by 4pm on 19 December 2017.
[8]
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: 18 December 2017