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File Number(s): 2025/00014750

Publication restriction: Nil

JUDGMENT

1. On 20 August 2025, I gave judgment in these proceedings: see Grubisa v Zhou [2025] NSWSC 942 (Principal Judgment).

2. These reasons assume familiarity with and maintain the same abbreviations as in the Principal Judgment.

3. In the Principal Judgment, I dismissed the Statement of Claim and directed the parties to confer to seek to agree any other orders to give effect to the reasons, including on the Cross-Claim and the appropriate costs order.

4. The parties were agreed that no further orders were required on the Cross-Summons and that the Plaintiff/Cross-Defendant is to pay the Defendant/Cross-Claimant’s costs of the proceedings including of the Statement of Claim and the Cross-Summons on the ordinary basis. They were not able to agree whether there should be a gross sum costs order or whether costs should be assessed. The parties have provided written submissions supporting their respective positions.

5. These reasons determine whether a gross sum costs order should be made.

6. For the reasons set out below, I am not satisfied that I should make a gross sum costs order.

Overview of the respective positions

7. The Plaintiff seeks the following orders:

8. The plaintiff/cross-defendant is to pay the defendant/cross claimant’s costs of the proceedings, including of the Statement of Claim and the Cross Summons, on the ordinary basis as assessed or agreed.

9. The Cross Summons is otherwise dismissed.

10. The Defendant seeks the following orders:

11. the Plaintiff is to pay the Defendant/Cross Claimant’s costs of the proceedings, including of the Statement of Claim and the Cross Summons, assessed on a gross sum basis in the sum of $80,000; and

12. the Cross Summons is otherwise dismissed.

Legal principles

9. The relevant principles are not in dispute and are well settled.

10. Section 98(4)(c) of the Civil Procedure Act 2005 (NSW) 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—

…

(c) a specified gross sum instead of assessed costs

11. In Manariti Plumbing Pty Ltd v Universal Property Group Pty Ltd (No 2) [2025] NSWCA 185 (Manariti), Free JA (McHugh and Ball JJA agreeing) recently summarised the relevant principles governing an application for a gross sum costs order at [30]-[38]:

[30] In Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 (Harrison v Schipp) at [21] Giles JA described the power to make a gross sum costs order instead of ordering assessed costs, conferred at that time by Pt 52A r 6(2)(c) of the Supreme Court Rules 1970 (NSW), as being unconfined and apt to be exercised whenever the circumstances warrant its exercise. The same approach applies to s 98(4) of the Civil Procedure Act: Hamod v State of New South Wales [2011] NSWCA 375 (Hamod) at [813].

[31] One of the circumstances that has been recognised as potentially warranting the making of a gross sum costs order is where the assessment of costs would be protracted and expensive, and in particular if it appears that the party obliged to pay the costs would not be able to meet a liability to pay the order likely to result from the assessment: Harrison v Schipp at [21]. That was the situation in Harrison v Schipp, where at [30] Giles JA found that Mrs Schipp “should not have to spend a lot more money which she will not recover” in order to obtain the costs payable to her.

[32] Even where the element of impecuniosity is not present, the length and/or complexity of the underlying proceedings and the associated likelihood of a lengthy and complex assessment are material considerations that can favour a gross sum costs order. A contested costs assessment in a matter with these characteristics is likely to involve expense, delay and aggravation of the kind that it is desirable to avoid by making a gross sum costs order: Hamod at [817]. Where there is a lack of proportionality between the complexity and cost of the assessment process and the amount at stake, that is also a factor favouring the making of a gross sum order: Zepinic v Chateau Constructions (Aust) Ltd (No 2) [2014] NSWCA 99 (Zepinic v Chateau Constructions) at [28], [31]. A related circumstance warranting such an order is where the total costs of litigation will become even more disproportionate if the costs are referred for assessment: Bechara (t/as Bechara and Company) v Bates [2016] NSWCA 294 (Bechara v Bates) at [18].

[33] In Hamod at [816] the Court held that in determining whether the sum sought is appropriate and meets these standards, factors that merit particular consideration 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 costs and the capacity of the unsuccessful party to satisfy any costs liability.

[34] A court entertaining an application for a gross sum costs order is not required to undertake a detailed examination of the kind that would be appropriate to a taxation or formal costs assessment: Hamod at [819], [823]. To require something akin to a formal costs assessment would defeat the purpose of the gross sum costs order: Bechara v Bates at [14].

[35] A corollary of that principle is that a broad brush approach is necessarily required: Bechara v Bates at [14]; Zepinic v Chateau Constructions at [31]. In Harrison v Schipp at [22] Giles JA referred with approval to the proposition that a gross sum “can only be fixed broadly having regard to the information before the Court” (quoting Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 (Beach Petroleum) at 124) and that the rule contemplates a court adopting a “much broader brush than would be applied on taxation”: Hadid v Lenfest Communications Inc [2000] FCA 628 at [35].

[36] At the same time, as Giles JA emphasised in the same passage in Harrison v Schipp at [22], the approach taken to estimating costs must be “logical, fair and reasonable” and the power should be exercised “only 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”: citing Beach Petroleum at 123 and Wentworth v Wentworth (Court of Appeal, 21 February 1996, unreported). The need for the Court to have confidence in arriving at an appropriate sum was emphasised in Colquhoun v District Court of New South Wales (No 2) [2015] NSWCA 54 at [6], where the deficiencies in the material in that regard were decisive.

[37] In Baychek v Baychek [2010] NSWSC 987 at [11] Ball J referred to the principle that the Court is entitled to take a broad brush approach provided that the approach is logical, fair and reasonable, and observed that it is implicit in this that the gross sum “bear a reasonable relationship to the actual costs of the party making the application, and to the costs that that party might reasonably be expected to recover on assessment. That means, among other things, that there must be a reasonable evidentiary basis for the order the court makes”. To similar effect, in Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2011] NSWSC 11, Barrett J at [21] held that a decision as to what is a sufficiently reliable calculation or estimate of an appropriate costs sum “will depend to a large extent on reaching some kind of view of what the outcome on assessment might be”.

[38] As a matter of practice, courts typically apply a discount in assessing costs on a gross sum basis: Hamod at [814]. Indeed, in Zepinic v Chateau Constructions at [38] the Court described this as the invariable practice of the courts when calculating a gross sum costs order. That 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”: Hamod at [820]. Such an approach tends to minimise the risk of a gross sum costs order creating unfairness by allowing for the recovery of costs in excess of the amount that would in fact have been recovered if the matter had proceeded to costs assessment

12. The parties also place reliance on Maximus Holdings (NSW) Pty Limited trading as Schreuder Partners Compensation Lawyers (ABN 40 110 829 868) v Sandra Primerano [2024] NSWSC 321 at [65] where I set out Peden J’s summary of the relevant principles in Bell v Hartnett Lawyers (No 4) [2023] NSWSC 1592 at [49].

Submissions

13. The Defendant submits that a gross sum costs order is appropriate for four reasons:

14. requiring the Defendant to go through the assessment process would involve further unreasonable cost and delay in circumstances where the principal claim advanced by the Plaintiff in the proceedings for specific performance was only abandoned in effect at the commencement of the final hearing, with the consequence that the costs incurred by the Defendant in meeting this claim were wholly wasted;

15. there is no reason in this case to believe that the Plaintiff has substantial assets, especially in circumstances where the Plaintiff was unable to obtain the finance necessary to complete the purchase which was the subject of the proceedings;

16. there is sufficient information available to the Court to enable an appropriate gross sum to be ordered so as to be fair between the parties;

17. the amount of the proposed gross sum costs order ($80,000) is relatively modest in the circumstances of the proceedings as a whole, and involves an appropriate discount to actual solicitor client costs ($107,000) of about 25%, putting the proportion sought (75%) well within the reasonable range (of 60% to 85% of solicitor client costs) recognised by the Court.

18. The Plaintiff submits that a gross sum costs order is inappropriate because:

19. the hearing was not complex or lengthy as it turned on one issue and only occupied one day;

20. there is no reason why an assessment of costs will be unusually protracted and expensive as the narrations for the fees claimed by the defendant run to only about three pages;

21. the defendant has not provided the Court with sufficient information for the Court to be able to assess the costs on a gross sum basis fairly between the parties;

22. a number of the items claimed by the defendant appear to be unreasonable;

23. there is no reason to find that the plaintiff is so impecunious that he will be unable to meet a costs order;

24. by withdrawing his claim for specific performance, the Plaintiff narrowed the scope of the claim and in any event did not obviate the need to determine the central factual and legal issue of the date of the contract.

25. In reply, the Defendant submits:

26. there is sufficient information in the invoices;

27. there are no individual items that are excessive;

28. the Court should be reluctant to assume that the Plaintiff will be readily able to meet a substantial costs order;

29. the Plaintiff only withdrew the specific performance claim on the eve of the final hearing which resulted in the Defendant incurring unnecessary and effectively wasted costs.

Consideration

16. In my view, it would not be appropriate for the Court to make a gross sum costs order in the facts of this case and on the material presented to me.

17. First, this is not a lengthy nor complex case which might give rise to further unnecessary expense and delay at a costs assessment. The hearing went for one day. The invoices, on my assessment, run for no longer than four pages. There is no evidence to suggest that a costs assessment would be protracted, expensive or burdensome.

18. Second, I am not satisfied that the Plaintiff is impecunious. There is no evidence on the costs application as to the net asset position of the Plaintiff. The Defendant cast the test in the negative, that the Court should not assume that the Plaintiff can meet a substantial costs order. However, the Defendant has not positively demonstrated that the Plaintiff is in fact impecunious. The Plaintiff has been represented throughout the proceedings by solicitors and counsel.

19. Third, the costs are substantial, and a further costs assessment would not be disproportionate. The total costs are $107,000 which is substantial in the context of a hearing that ran for only one day with only a limited number of issues .

20. Fourth, the evidence on the application is insufficient to arrive at an appropriate sum to be fair between the parties. The solicitor for the Defendant, Vincent Cheng, does not depose as to how long he has been in practice, nor as to any experience in the assessment process, or whether the costs incurred are proportionate in the relevant sense.

21. Fifth, Plaintiff has drawn attention to a number of entries in the itemised costs which the Plaintiff says would be challenged in a costs assessment on the grounds of reasonableness and proportionality. The Court is not in a position to determine the ultimate merits of those objections, and these are matters for an expert costs assessor to assess: see Manariti at [48]-[52]. This is not determinative but is a factor against the appropriateness of a gross sum costs order.

22. Further, most of the entries in the itemised costs are very brief and provide little detail as to the substantive work involved, making an assessment of its appropriateness quite difficult. Further, no memoranda of fees from counsel have been provided.

23. The fact that the Court, on applications such as the present, can bring to bear its own experience as to costs (see Tran v Bakour (No 2) [2025] NSWSC 272 at [29]) does not require the Court, in every case, to determine what an appropriate gross sum is.

Orders

24. The orders of the Court are:

25. The Plaintiff/Cross-Defendant is to pay the Defendant/Cross-Claimant’s costs of the proceedings, including of the Statement of Claim and the Cross-Summons, on the ordinary basis as assessed or agreed.

26. The Cross-Summons is otherwise dismissed.

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