Huang v Attapallil

Discernment - Indemnity Costs

In my view, an indemnity costs order is appropriate in all of the circumstances of this case, for these reasons.
In the principal judgment the Court, at some length, between [16] and [86] reviewed the litigation history involving Ms Huang and the third defendant.
It is unnecessary to repeat all of that material here. However, it is appropriate to recall that in the relevant litigation brought by Ms Huang, at all times the third defendant, Mr Thornley, was the solicitor on the record for the person against whom the initial litigation was directed, namely, Mr Bernhard Drumm, a resident of New Zealand. Mr Thornley and Mr Drumm were opposed to Ms Huang, and had different interests in the litigation commenced by Ms Huang. The third defendant's role as solicitor in the other proceedings was to advance his client's interests, and not those of Ms Huang.
I noted, at [18] of the principal judgment, that in those proceedings, the conduct of the third defendant in respect of which Ms Huang made complaint was that he had knowingly sworn a false affidavit in proceedings in the District Court of NSW to obtain a transfer of those proceedings to New Zealand. It was further alleged that he had conspired with the lawyers representing Ms Huang to disadvantage her in some unspecified way.
I concluded in the principal judgment that the allegations being made in the proceedings with which I was dealing were similar to, and largely the same as, the allegations which Ms Huang had made in proceedings in the District Court, which she had commenced on 25 July 2016. I noted that the third defendant had written to Ms Huang in those proceedings outlining the difficulties connected with the orders being sought in that Court, and inviting her to withdraw the Summons insofar as it affected him, with each party to pay his and her own costs.
In the principal judgment, I noted that on 11 November 2016, Gibb DCJ dismissed Ms Huang's Summons, dismissed a Notice of Motion which she had filed seeking an order that the proceedings be transferred to this Court, and ordered her to pay the defendant's costs of the proceedings on an indemnity basis: see [82] of the principal judgment.
I remain satisfied that the relief sought in those proceedings largely mirrored the relief which had been sought in the proceedings summarily dismissed by Gibb DCJ. Ms Huang in her submissions accepted that this was so.
In those circumstances, although the time given in the Offer of Compromise was short, it was adequate to enable Ms Huang to make a decision because she was well informed of all the facts, and the issues and the period allowed by the offer was sufficient in all of the circumstances.
Ms Huang was well informed of all of the facts, including the difficulties with her litigation, by the argument which had taken place in the District Court before Gibb DCJ, including the correspondence which preceded that argument, by the terms of the judgment of Gibb DCJ, by the terms of the letter which was sent by the third defendant's solicitors on 15 November 2016, and by the covering letter which accompanied the Offer of Compromise.
I am in no doubt whatsoever that Ms Huang well knew the deficiencies in her proceedings - which were obvious, even to a self-represented litigant - and determined nonetheless that she would continue. That decision was, in all of the circumstances, an unreasonable one.
In support of this conclusion, I note that Ms Huang did not adduce any evidence on the indemnity costs issue, that she did not herself have sufficient time to consider the offer, nor did she adduce any evidence that she had written to the solicitors for the third defendant asking for the time to be extended so that she could respond to the offer, having had a further period of consideration. The absence of any such evidence enables me to more comfortably reach the conclusion which I have expressed.
As I have earlier described, her claim was in its formulation hopeless and appropriate for summary dismissal. Ms Huang was warned in good time of the consequences of continuing with it. She acted unreasonably in pursuing her claim.
In all of those circumstances, I am well satisfied that an order for indemnity costs should be made.

Gross Sum Costs Order

As earlier indicated, the third defendant seeks a gross sum costs order in an amount of $27,890.
The legislative warrant for such an order is found in s 98(4)(c) of the Civil Procedure Act 2005 which 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 entitled to: (a) costs up to, and 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 discretion to make a gross sum costs order is not confined, and may be exercised where circumstances warrant, having regard to the scope and purpose of the provision: Hamod v State of New South Wales [2011] NSWCA 375 per Beazley JA (Giles and Whealy JJA agreeing) at [813]; Harrison v Schipp [2002] NSWCA 213; (2002) 54 NSWLR 738 per Giles JA at [21]-[22]. In particular, the power to make a gross sum costs order may be exercised where the assessment of costs would be protracted and expensive and, as well, if it appears that a party obliged to pay the costs would not be able to meet a liability of the amount likely to result from the assessment. However, as Giles JA noted in Harrison at [22], the power to make a gross sum costs orders should only be exercised if a Court can do so fairly, and in particular, if the Court has sufficient confidence, having regard to the materials available, that an appropriate sum can be determined.
When dealing with the making of a gross sum costs order, Beazley JA, with whom Giles and Whealy JJA agreed, said in Hamod this at [816]: "The terms of s 98(4) together with the more general considerations reflected in the Civil Procedure Act …, suggest that 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 the costs; and the capacity of the unsuccessful party to satisfy any costs liability …"
The exercise of the power under s 98(4)(c) of the Civil Procedure Act may be appropriate when the Court considers that it is desirable to avoid the expense, delay and aggravation likely to be involved in a contested costs assessment. This may arise from the likely length and complexity of the assessment process 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: see Hamod at [817].
In making a gross sum costs order, the Court is not required to undertake a detailed examination of the type that would be appropriate to a taxation or formal costs assessment: Harrison at [39]; Hadid v Lenfest Communications Inc [2000] FCA 628 at [35]; Hamod at [819]; Auspine Ltd v Australian Newsprint Mills Ltd [1999] FCA 673; (1999) 93 FCR 1 at 5.
The approach to a gross sum costs order must be, although an estimate, a process which is logical, fair and reasonable, and 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 form of costs assessment: Hamod at [820]. In exercising the power to award a gross sum for costs, the Court needs to be astute to prevent prejudice to the respondent on the one hand by overestimating the costs and, on the other hand, not to cause an injustice to the successful party by applying some form of fail-safe discount on the costs estimate submitted: Savage v Australian Unit Fund Management Ltd [2011] NSWCA 270 at [31]-[33]; Hamod at [793].
The evidence adduced by the third defendant demonstrated that he had entered into a written costs agreement with the firm, Lander & Rogers, with effect from 8 November 2016 with respect to the legal costs incurred in his defence of the proceedings.
Further, the evidence disclosed on an itemised basis that the costs billed by Lander & Rogers to the third defendant totalled $24,264.35, including GST. Counsel's fees totalling $6,872.25 had been incurred and paid. In addition, a filing fee for the Motion in the Supreme Court of $395 had been incurred and paid. In total this came to $31,531.60.
The solicitor's costs (but not counsel's fees or other disbursements) were then said to be appropriately discounted by 15%, representing a broad brush discount for any sums which might not be allowed on assessment, resulting in a total of $27,891.94. This sum was then rounded down.
In her submissions on the question of the making of a gross sum costs order, and the amount of it, Ms Huang drew attention in detail to several of the items described in the Table of Costs prepared by Lander & Rogers and tendered in the proceedings. She submitted, by reference to a significant number of identified items, that upon a costs assessment they would not be properly allowable.
Ms Huang drew attention to a decision in Gibson v Drumm [2016] NSWSC 570, a proceeding in which the third defendant acted for the defendant, Mr Drumm. In that judgment Young AJ made a gross sum costs order on an indemnity basis against Mr Gibson, but in so doing, made some remarks of a broad and general kind with respect to some items which were there claimed by the third defendant on behalf of Mr Drumm.
In that case, Young AJ indicated that certain items claimed would not be allowable, after making those deductions, then having made a generalised deduction of 12% to the entirety of the solicitor's bill to reflect what might happen upon a costs assessment.
In addition to challenging some items in the Table of Costs tendered in these proceedings, Ms Huang submitted that the Court would not allow the hourly rate claimed by any of the solicitors who had expended time and worked on these proceedings. In support of the claim that the hourly rates should be reduced, Ms Huang relies upon a costs assessment in Local Court proceedings where a costs assessor reduced the hourly rate which had been charged by various solicitors employed by Lander & Rogers who had been engaged on that matter. The reasons of the costs assessor are not before this Court. One obvious reason why the costs assessor would have reduced the costs in that circumstance is that the proceedings were brought in the Local Court where the issues are less complex, the facts are generally less complex and the ordinary rates allowed for lawyers in that litigation are significantly less than those allowed for litigation in this Court. Whatever the specific reasons of the costs assessor were, I would not regard the way in which a costs assessor has approached a bill for proceedings in the Local Court as providing any basis for the reduction of hourly rates for proceedings in this Court.
I have read through the table of Lander & Rogers' costs. I have had regard to the submissions of Ms Huang in detail. None of the submissions are persuasive. The rate of the costs charged is reasonable. The total of the costs charged is reasonable. In my view, the costs sought to be recovered, being the sum remaining after the application of a 15% discount, is a reasonable sum.
To the extent that there are any items which would not be allowed on a costs assessment, in my view the allowance of 15% is adequate and appropriate.
Accordingly, I am persuaded that a gross sum costs order in the amount of $27,890 ought be allowed.

At a glance

Court

Decision date

Before

Source

Judgment (7 paragraphs)

Parties

Cases Cited (10)

Cited By (1)