Huang v Drumm

Supreme Court of NSW|2017-07-28|Before: Adamson J

Solicitors: Lander & Rogers Lawyers (Defendant) File Number(s): 2017/176611 Decision under appeal Court or tribunal: Local Court of New South Wales Jurisdiction: Civil Date of Decision: 23 May 2017 Before: Barnett LCM File Number(s): 2015/22577

The defendant's application

After delivery of judgment on the summons filed by Biru Huang (the plaintiff) on 14 July 2017, in the substantive proceedings (Huang v Drumm [2017] NSWSC 949) Bernard Drumm (the defendant) applied for an order that the costs ordered to be paid to him by the plaintiff be paid on a higher basis (ordinary basis to 21 June 2017 and on an indemnity basis thereafter) and that they be fixed in the sum of $11,070 under s 98(4)(c) of the Civil Procedure Act 2005 (NSW).

The defendant's application for indemnity costs as a result of the offer made on 21 June 2017

For the reasons given in my substantive judgment, the plaintiff's claim was doomed to fail. The defendant made an offer, on which he was entitled to rely, which contained a material element of compromise since he offered not to seek the costs incurred in these proceedings to the date of the letter, 21 June 2017. Although the summons had only been filed on 13 June 2017, Mr Cohen's letter contained a detailed analysis of the relevant principles by reference to the provisions of the Local Court Act 2007 (NSW) and the relevant authorities, as well as detailed factual submissions as to why the relief claimed in the summons would not be granted.
The defendant's offer was a reasonable one. It was unreasonable of the plaintiff not to accept it. Her refusal to accept the offer meant that the defendant was obliged to incur the costs of the hearing. As referred to above, the defendant also incurred costs which ought to have been incurred by the plaintiff in that, once it became apparent that the plaintiff did not propose to comply with her obligation under UCPR r 50.14, Mr Cohen assembled the necessary documents and prepared an affidavit so that this Court would have what was required to determine the issues raised by the summons.
In these circumstances I am persuaded that it is appropriate to order that the plaintiff pay the defendant's costs on an ordinary basis up to and including 21 June 2017 and on an indemnity basis thereafter.

The defendant's application for a gross sum costs order pursuant to s 98(4) of the Civil Procedure Act

The relevant principles for awarding a gross sum for costs were articulated by the Court of Appeal (Beazley P, Meagher and Payne JJA) in Bechara (t/as Bechara and Co) v Bates [2016] NSWCA 294 in the following passage: "[12] The power to award a lump-sum should only be exercised when the Court considers that it can do so fairly between the parties and where an appropriate sum can be determined from the available materials: Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 at 742-723 [21]-[22]; Beach Petroleum NL v Johnson (No 2)(1995) 57 FCR 119 at 123. [13] The power may also be exercised where a party's conduct has unnecessarily contributed to the costs of the proceedings, especially where the costs incurred have been disproportionate to the result of the proceedings: Hamod v New South Wales [2011] NSWCA 375 at [818] per Beazley JA (Giles and Whealy JJA agreeing). [14] A "broad brush" approach is appropriate. To require the same or similar level of detail as in a formal costs assessment would defeat the purpose of the lump sum order: Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR 1; [1999] FCA 673 at 5 [16]; Penson v Titan National Pty Ltd (No 3) [2015] NSWCA 121 at [7]. [15] The courts have typically applied a discount in assessing costs on a gross sum basis: Hamod v New South Wales at [814]. . . . [18] The Court is satisfied that the total costs of this litigation will become even more disproportionate if the costs are referred for assessment and a lump-sum costs order is not made. The reasoning in Hamod v New South Wales at [816]-[817] is apposite."
The costs incurred by these proceedings are disproportionate to the result in that the proceedings which were the subject of the summons are Local Court proceedings. The order which was challenged was an interlocutory order made by a magistrate in the course of the hearing, which has not yet concluded. The plaintiff's excursion to this Court has been both futile (as she has lost) and expensive for the defendant (since he was represented). I am satisfied that the detail in the invoices annexed to Mr Cohen's affidavit provide sufficient material to determine an appropriate sum. The discount of 20% for solicitor's fees is reasonable for an application such as the present, having regard to the charge-out rates of Mr Cohen, which I regard as reasonable for such a matter. In addition, as referred to above, I consider that the plaintiff unnecessarily contributed to the costs incurred by the defendant by failing to comply with her obligations, as plaintiff, under the UCPR, which had the effect that the defendant's legal representatives felt obliged to provide the material to the Court so that the matter could be heard and determined on the basis of the necessary material.
It is also of significance that the plaintiff has not sought to be heard against the applications for gross sum costs orders. In all the circumstances I am persuaded that it is appropriate to make gross sum costs orders as sought. As I am to take a "broad-brush" approach, I have rounded down the amount sought to the nearest thousand dollars.
I am satisfied that it is appropriate that the costs of these applications for gross sum costs orders ought follow the event.

Orders

I make the following orders: 1. In lieu of the order I made on 14 July 2017 that the plaintiff pay the defendant's costs of the proceedings, order the plaintiff to pay the defendant's costs of the proceedings on the ordinary basis up to and including 21 June 2017, and thereafter on an indemnity basis. 2. In respect of the costs payable pursuant to order (1) above, order the plaintiff, pursuant to s 98(4) of the Civil Procedure Act 2005 (NSW), to pay to the defendant the amount of $11,000 within 28 days of the date of this order. 3. Order the plaintiff to pay the defendant's costs of his application for indemnity costs and for the gross sum costs order.

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: 28 July 2017

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Judgment (7 paragraphs)

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