Hanna v BOS Holdings Pty Ltd

Costs not payable on an indemnity basis

1. However, we do not agree that these costs should be paid on an indemnity basis or that there should be a lump sum costs order.
2. As explained below, there are no factors present that might warrant an indemnity costs order. The respondent's submissions simply contended that it had no alternative but to oppose the appeal and it therefore should be indemnified for all the costs it incurred and that it would be unfair and unreasonable if costs on an indemnity basis were not awarded.
3. These submissions misunderstand the circumstances in which indemnity costs will be awarded. Those circumstances usually involve some "relevant delinquency" or unreasonable conduct on the part of the unsuccessful party: per Gaudron and Gummow JJ in Oshlack at [44]; Aurora Funds Management Limited v Bond Street Custodians Limited & Ors [2019] NSWSC 304 at [91].
4. In Free Serbian Orthodox Church Diocese for Australia and New Zealand Property Trust v Bishop Irinej Dobrijevic (No 3) [2017] NSWCA 109, a case in which a successful respondent on an appeal did not succeed in obtaining an order that the appellant pay its costs on an indemnity basis, the Court of Appeal cited (at [60]) the well known passage from the decision of Justice Shepherd in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 (at 230-234) as setting out the principles applicable to an award of indemnity costs : "In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. The tests have been variously put. The Court of Appeal in Andrews v. Barnes (39 Ch D at 141) said the Court had a general and discretionary power to award costs as between solicitor and client "as and when the justice of the case might so require." Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v. Preston ((1982) 1 All ER at 58) namely, there should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at 8) in Tetijo, "The categories in which the discretion may be exercised are not closed". Davies J expressed (at 6) similar views in Ragata. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v. Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v. Hutchinson (1987) 10 NSWLR 525, Maitland Hospital v. Fisher (No. 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal), Crisp v. Keng (Supreme Court of New South Wales, 27 September 1993, unreported, Court of Appeal) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis. It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice."
5. However, in support of its application for a lump sum costs order, but not in support of the application for indemnity costs, the respondent submitted that the appeal was instigated upon untenable grounds. Such a factor, if it be established, might lead to an order that the costs be paid on an indemnity basis. For the reasons below, we do not agree that the grounds for the appeal were untenable.

No lump sum costs order

1. The Tribunal has power to order that a lump sum of costs fixed by the Tribunal be paid rather than order that the costs to be paid are those that are assessed (or agreed): Chi v Roger Fuller Pty Ltd (No 2) [2018] NSWCATAP 220 at [49]. The power is found in s 60(4)(a) of NCAT Act. The Tribunal has ordered that such costs be paid on a number of occasions; for example, in Roberts v Chan & Naylor Parramatta Pty Ltd aft Chan & Naylor Parramatta Trust (No. 2) [2019] NSWCATAP 62.
2. The Tribunal has also refused to make such a costs order where it has not been provided with adequate material to enable it to determine an appropriate amount which is fair to both parties; see, for example, Chi and in Ellis v The Owners - Strata Plan 80605 [2018] NSWCATAP 174.
3. The respondent submitted that we are able to make an order for a lump sum payment based upon the respondent's Costs Disclosure letter dated 10 November 2017, the tax invoice from Galluzzo Lawyers in respect of the appeal dated 31 October 2018 and the itemisation of these costs setting out in detail (and broken down on a time basis) the work done by Mr Galluzzo, as partner, and by Mr Georgieff, an employed solicitor, along with the charge out rates.
4. The tax invoice from Galluzzo Lawyers to the respondent was for the amount of $35,000.38, including GST and disbursements. The disbursements totalled $508.14, excluding GST.
5. Whilst not expressly stated, it appears to follow from the claim for a lump sum order in conjunction with the claim for indemnity costs, that the respondent sought an order that costs in the amount of $35,000.38 be paid by the appellant. It does not suggest any discount to this sum or set out the basis upon which an appropriate discount might be applied.
6. In support of a lump sum costs order, the respondent relied upon the decision of the New South Wales Court of Appeal in Bechara trading as Bechara and Company v Bates [2016] NSWCA 294 in respect of the principles to be applied, including that a "broad brush" approach is appropriate.
7. The respondent's submissions included: 1. The appeal was instigated upon untenable grounds and has resulted in unnecessary costs to the respondent leading to the amount of costs for the original proceedings and the costs of the appeal exceeding the amount in issue. 2. For the respondent to go through another costly process to assess the costs would impose an unwarranted difficulty and burden on the respondent especially in circumstances where the costs were already out of proportion to the amount in issue. It was estimated that the cost of an assessment would be about $5,000.00. 3. There may be a strong possibility that the monies due to it will not be recovered in full and that further costs will be incurred in the enforcement of the judgment. That this was a relevant factor was supported by paragraph 15.16 of Mr Dal Pont's text on costs. Attached to the submissions was a property search which indicated that there were two mortgages on some land in western Sydney owned by one of the appellants. However, there was no evidence as to the amount of debt secured by these mortgages relative to the value of the land.
8. As we have already mentioned, we do not agree that the appeal was brought upon untenable grounds. The starting point in the proceedings was that in order to obtain commission on the sale the respondent needed a grant of relief under s 55A of the PSBA in circumstances where the agency agreement which contained the obligation to pay commission did not comply with the requirement of the regulations. In order to obtain such relief the Tribunal needed to be satisfied of certain conditions. However, as appears from our reasons dismissing the appeal, there were grounds for criticism of the Tribunal's reasons in relation to those factors, which, in our opinion, gave rise to arguable points on the appeal: see at [27], [32] and [35]. In addition, in our opinion, the appellants raised an arguable point on the appeal about the significance of s 72A of the PSBA: see our reasons at [29] - [30].
9. In addition to a complex case where a costs assessment would be highly burdensome, another category of case in which a lump sum costs order will be awarded is the opposite situation, namely a very short and relatively straightforward case where the costs can be expected to be modest and an assessment might lead to unnecessary expense: Bobb v Wombat Securities Pty Ltd & Ors (No 2) [2013] NSWSC 863 per Beech-Jones J at [6]. In addition, in such a case the decision maker is likely to be in a much better position than in other cases to make a reasonably well-informed assessment of the appropriate level of costs.
10. The issues on the appeal in this case were relatively straightforward and were capable of being dealt with quite shortly. Had the respondent presented a more modest amount of costs, including, perhaps, a suggested discount supported by experience, we might well have considered that we could comfortably make a reasonably well-informed assessment for the purposes of a lump sum costs order.
11. However, we are concerned at the reasonableness of the costs put forward by the respondent, which is the starting point for our consideration of an appropriate figure. Whilst open to correction, our impression is that they exceed by a considerable margin the amount of costs that would be a fair and reasonable amount between the parties even if a discount of, say 30%, was to be applied. In this context, our examination of the itemisation of the costs raises an issue about duplication of work between Mr Galluzzo and Mr Georgieff and also as to the amount of the time spent by each in preparation.
12. Accordingly, we do not think it would be fair to either party for us to fix an amount for a lump sum costs order.
13. In so concluding, we have taken account of the concern about the appellants' ability to pay costs. The material about this does not, however, rise above suspicion. In any event, doubt about the appellants' ability to pay would not overcome the problem we have faced about arriving at a reasonably well-informed assessment.

Orders

1. For these reasons, we order that: 1. A hearing of the respondent's costs application be dispensed with. 2. The appellants are to pay the respondent's costs of the appeal as agreed or assessed.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar 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: 29 March 2019