Solicitors:
Cornwalls (Plaintiff)
YPOL (First, Second and Third Defendants)
William Roger Stone Lawyers (Fourth and Fifth Defendants)
File Number(s): 2016/257478
[2]
Judgment
I gave judgment in this matter on 10 May 2022. [1]
I ordered that the proceedings against all defendants be dismissed with costs.
I will use the same abbreviations as in the primary judgment.
A number of further issues arise.
[3]
Gross sum costs order
First, the defendants seek an order under s 98(4) of the Civil Procedure Act 2005 (NSW) that the plaintiff pay a specified gross sum for their costs and that I determine that sum.
The first to third defendants estimate that their recoverable costs will be in the order of $1.48 million. They also seek costs in the order of $150,000 for related judicial advice proceedings. The fourth and fifth defendants estimate their costs of the proceedings on a party-party basis to be in the order of $310,000.
I invited submissions as to why, as a matter of principle, and before consideration of the quantum of any gross sum costs order, such an order should be made.
I have now heard submissions on that question.
A gross sum costs order involves a departure from the usual process by which costs are assessed in accordance with the statutory procedures now found in the Legal Profession Uniform Law 2014 (NSW). [2]
An applicant for a gross sum costs order must point to some reason why it is appropriate that the usual process not be followed.
The exercise of the power to award gross costs must take into account the overriding purpose identified in Pt 6 of the Civil Procedure Act and, in particular, the requirement that issues between the parties be resolved "in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute". [3]
Factors relevant to whether the discretion to order a gross sum costs order should be exercised include "the relative responsibility of the parties for the costs incurred …; 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". [4]
Other relevant factors are the complexity, and hence likely cost of, the assessment process and the willingness of an applicant for costs to discount the likely amount of costs recoverable on assessment. [5]
There is no suggestion in this case that the plaintiff could not satisfy a costs order, including the costs of assessment.
Further, the defendants acknowledge that courts typically apply a discount to assessing costs on a gross sum basis. [6]
As to the likely time and costs of an assessment of costs, I have before me a range of opinions as to the likely length and cost of an assessment process. The solicitor for the first to third defendants, Mr Timothy Price, estimated that an assessment process would take a number of years and cost something in the order totalling $250,000. Mr Mike Dudman, a costs assessor engaged by the plaintiff, expressed a more optimistic, but necessarily high level, view having not had the experience in this litigation that Mr Price has had. What is clear is that the costs involved in a gross sum costs application will be significantly less than in the usual process of assessment.
It has been said that a gross sum costs order may be particularly appropriate in a lengthy and complex case. [7]
There is no question that these proceedings have been both lengthy and complex. The proceedings were commenced in 2016, initially in Queensland then transferred to this Court, and did not come on for hearing until March of this year. The complexity of the issues is revealed in my primary judgment. I do not see the estimated costs, set out at [6] above, as being, on their face, out of proportion to the issues litigated.
Each party pointed to conduct of the other that was said to have contributed, unnecessarily, to the level of costs incurred. I do not think it necessary, or profitable, to analyse such matters.
Mr Pritchard SC, who appeared with Mr Macauley for the first to third defendants, placed particular emphasis on my familiarity, as trial judge, with the complex issues in the proceedings and the manner in which the case was conducted at trial. Of course, a trial judge will always be more familiar with such matters than a costs assessor. But, in this particular case, I agree that my familiarity with the manner in which this case was conducted would assist in coming to a realistic and fair assessment, on the admittedly broad brush approach required, of an appropriate gross sum costs order.
Another obvious advantage to the making of a gross sum costs order is that it can be dealt with by me relatively speedily and thus bring to an end, at least at trial level, this very longstanding dispute.
Further, if history is any guide, an assessment of costs in this case will be drawn out, as is demonstrated by the following.
On 16 October 2015, in different but related proceedings, Gilmore Holdings was ordered to pay A3's costs of Gilmore Finance's appointment of a receiver to the Hospital Land.
A1 claimed an amount of some $147,000. On 12 April 2016, a costs assessor assessed A3's costs at a figure in the order of $78,000. A3 sought a review of that assessment. On 5 September 2016, a Review Panel confirmed the assessment. On 22 and 27 July 2017, Wilson SC DCJ heard an appeal from the Review Panel's decision. On 18 January 2018, his Honour delivered judgment allowing the appeal and ordering that Gilmore Finance pay A3's costs in the order of $142,000. [8]
Gilmore Finance paid that amount and then, on 21 December 2018, and well out of time, appealed to the Court of Appeal against Wilson SC DCJ's order and sought judicial review of that order.
A3 issued subpoenas to test Mr Gilmore's contention that his ill-health accounted for the delay in Gilmore Finance appealing and seeking judicial review. There was a contest about that matter. On 24 July 2019, Simpson AJA dismissed Gilmore Finance's challenge to the subpoenas. [9]
Ultimately, Gilmore Finance abandoned its appeal from Wilson SC DCJ's orders but proceeded to seek judicial review of his Honour's decision. That application was dismissed by the Court of Appeal on 18 June 2020. [10]
In the course of giving the judgment of the Court, Meagher JA said:
"Gilmore Finance's application to extend time must also confront the public interest in parties not incurring costs in litigation that are out of proportion to the amount in dispute and the importance of the claim: Civil Procedure Act 2005 (NSW), s 60. That is especially so where the subject matter of the claim is legal costs incurred in earlier litigation: see Huang v Attapallil [2017] NSWCA 181 at [21] (White JA). The applicant seeks to set aside the District Court judgment making it necessary for [A3] to pursue a further costs assessment appeal in the District Court. That will involve the parties incurring further legal costs which, combined with the costs of this proceeding, almost certainly will exceed the amount in issue." [11]
It thus took almost five years for A3's costs of the order made in its favour on 16 October 2015 to be finally determined.
It is true, as Mr Aspinall, who appeared for Gilmore Finance, pointed out, that Meagher JA also recorded that Gilmore Finance's decision to challenge Wilson SC DCJ's orders was a "result of an unsolicited recommendation from counsel" retained to act on another aspect of the costs dispute [12] rather than, to adopt Mr Aspinall's words, "through any vexatious or querulous attempt to be uncooperative". Nonetheless, it appears Mr Gilmore was prepared to accept, and to act on, that "unsolicited advice".
That does not augur well for a speedy and timeous process of the assessment of costs in these proceedings.
In these circumstances I am persuaded that I should make a gross sum costs order.
[4]
The judicial advice application
The first and second defendants also sought an order that the plaintiff pay their costs in relation to two applications made by the first and second defendants for judicial advice and that a gross sum costs order be made in relation to those costs.
Before me, Mr Pritchard did not pursue that application with great enthusiasm.
The applications for judicial advice were made in separate proceedings before other members of this Court. [13]
Those proceedings are not before me and I do not think it appropriate that I make any orders in them.
[5]
Interest on costs
The defendants also seek an order that interest on their costs runs from the date when the costs were paid, rather than, as is the default position under s 101(4) of the Civil Procedure Act, from the date of my costs order.
The defendants accepted that there must be some sufficient reason to engage the Court's discretion to order that the interest runs otherwise than from the date of the costs order.
The mere fact that proceedings have been protracted and that the party in favour of whom the costs order has been made has had to outlay costs over a long period is not itself sufficient. [14]
On behalf of the first to third defendants, it was submitted that it could not be said that they were responsible "for the inordinate amount of time taken to have this matter reach trial and determination".
However, as Mr Aspinall pointed out, some of the delay in these proceedings has been caused by the defendants.
I am not persuaded sufficient cause has been shown to make the order sought by the defendants.
[6]
Indemnity costs
The fourth and fifth defendants seek indemnity costs of the two claims brought by the plaintiffs against them on the basis that my findings show that, if properly advised, these claims should not have been brought in the first place.
The first claim made by the plaintiff against the fourth and fifth defendants was that they had failed to repay what I referred to as the Gilmore Finance Loan by meeting their obligations under the 2012 Unit Subscription Payment Agreement. I rejected that claim at [334]-[338] of the primary judgment.
Mr Amirbeaggi's evidence about the loan repayments was contained in an affidavit made on 8 March 2022, less than a week before the trial commenced. That evidence was served very late, but not objected to or challenged. Once that evidence was adduced, it was difficult to see how this aspect of Gilmore Finance's case could succeed. However, it is not clear to me why Gilmore Finance should have regarded this claim as "hopeless" prior to that evidence being adduced.
The second claim brought by the plaintiff against the fourth and fifth defendants was the Under-Contribution Claim which I rejected at [435]-[445] of the primary judgment. This was on the basis that the claim failed to take into account what Gilmore Finance itself had, with the benefit of independent advice, agreed to in August 2012. I characterised the latter claim as an attempt by Gilmore Finance to "rewrite history". [15]
Nonetheless, I am not persuaded that this is an appropriate case for an order for indemnity costs. Gilmore Finance was unsuccessful against the fourth and fifth defendants. But I do not see this as a case where the bringing of the claims itself warrants an order for indemnity costs.
[7]
Conclusion
I note that the fourth and fifth defendants rely on the affidavit of Matthew Gradidge of 1 July 2022 in relation to their application for a gross sum costs order and, as presently advised, do not propose to adduce any further evidence on that question.
I direct that:
1. by 15 July 2022, the first to third defendants serve, and deliver to my Associate, all itemised invoices the subject of the proposed gross sum costs order, redacted to preclude disclosure of communications the subject of client legal privilege;
2. by 20 July 2022, the first to third defendants serve, and deliver to my Associate, any evidence from a costs assessor as to the reasonableness of the legal costs incurred by the first to third defendants and opinion as to the appropriate quantum of a gross sum costs order for the first to third defendants' claim costs; [16]
3. by 5 August 2022, the plaintiff serve, and deliver to my Associate, any evidence in response;
4. by 12 August 2022, the parties exchange, and provide by email to my Associate, submissions as to the appropriate quantum for a gross sum costs order, and as to the costs of the application for the gross sum costs order, such submissions not to be in single spaced typing and not to exceed 15 pages;
5. the question of the appropriate quantum of the gross sum costs orders be determined on the papers unless any party seeks an oral hearing, application for which should be made to my Associate no later than 5pm on 16 August 2022; and
6. the parties have leave to apply on 24 hours' notice in relation to the form of these orders, such liberty to be exercised by 5pm on 15 July 2022.
[8]
Endnotes
Gilmore Finance Pty Ltd v Aesthete Pty Ltd atf the Real Money Unit Trust (No 2) [2022] NSWSC 557.
eInduct Systems Pty Ltd v 3D Safety Services Pty Ltd (No 2) [2015] NSWCA 422 at [8] (Beazley P (as her Excellency then was) and Basten JA).
Civil Procedure Act s 60 and see James v Australia and New Zealand Banking Group Ltd [2017] NSWCA 84 at [3] (Basten JA; Simpson JA agreeing).
Hamod v State of New South Wales and Anor [2011] NSWCA 375 at [816] (Beazley JA; Giles and Whealy JJA agreeing).
eInduct Systems Pty Ltd v 3D Safety Services Pty Ltd (No 2) at [10] (Beazley P and Basten JA).
Bechara trading as Bechara and Company v Bates [2016] NSWCA 294 at [15] (Beazley P, Meagher and Payne JJA).
Hamod v State of New South Wales and Anor at [817] (Beazley JA).
Aesthete No 3 Pty Limited ACN 127 464 966 v Gilmore Finance Pty Limited ACN 104 792 627 and Anor. [2018] NSWDC 1.
Gilmore Finance Pty Ltd v Aesthete No 3 Pty Ltd [2019] NSWCA 181 at [31].
Gilmore Finance Pty Ltd v Aesthete No 3 Pty Ltd [2020] NSWCA 114 at [36] (Meagher JA; Macfarlan and White JJA agreeing.)
At [33].
At [23] and [30].
Court file numbers 2018/186268 and 2022/60853.
For example, Illawarra Hotel Company Pty Ltd v Walton Construction Pty Ltd (No 2) [2013] NSWCA 211 at [38] (Meagher, Barrett and Ward JJA).
Primary judgment at [442].
Orders (a) and (b) are in the terms proposed by the first to third defendants
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Decision last updated: 13 July 2022