Huang v Drumm

Huang v Drumm - [2019] NSWSC 877 - NSWSC 2019 case summary — Zoe

[4]

These proceedings

Ms Huang commenced these proceedings against Mr Drumm on 30 March 2016 in the District Court of New South Wales (2016/96823). The underlying complaint made in the proceedings is that Mr Drumm breached various duties as trustee of the CCST, in relation to an agreement to settle the 2010 Supreme Court proceedings.
On 29 April 2016, Mr Drumm filed a notice of motion seeking to have the proceedings permanently stayed under s 17 of the Trans-Tasman Proceedings Act 2010 (Cth) (TTPA) and, on 8 July 2016, Judge Williams of the District Court made orders to that effect.
On 10 October 2016, Ms Huang filed a summons seeking leave to appeal from the orders of Judge Williams. The Court of Appeal granted leave as there was doubt about the District Court's jurisdiction to deal with the breach of trust and fiduciary duty claims made by Ms Huang.
A notice of appeal was filed and, on 29 May 2017, orders were made by consent allowing Ms Huang's appeal, setting aside the orders of Judge Williams and transferring the proceedings to the Supreme Court. In these reasons, I refer to Ms Huang's application for leave to appeal and the appeal from the orders of Judge Williams together as the "jurisdiction appeal".
On 27 February 2018, the Court of Appeal Registrar made orders that Ms Huang and Mr Drumm were to pay their own costs in relation to the jurisdiction appeal.
On 18 August 2017, shortly after the first directions hearing in the Supreme Court, Mr Drumm filed an amended notice of motion seeking to have the proceedings permanently stayed pursuant to s 17 of the TTPA and, in the alternative, an order that Ms Huang provide security for Mr Drumm's costs (Amended Notice of Motion).
During the period between the Amended Notice of Motion being filed and heard, the parties attended directions hearings and engaged in interlocutory disputes concerning a range of matters, including: 1. applications for extensions of time for service of Ms Huang's amended statement of claim; 2. challenges by Ms Huang and Mr Drumm to notices to produce served by each of them, which led to Ms Huang seeking a review of Senior Deputy Registrar Hedge's decision on 7 February 2018 in respect of both notices to produce and Pembroke J ordering Ms Huang to use her best endeavours to produce some documents and otherwise dismissing her motion with no order as to costs on 19 April 2018; 3. extensions of time for Ms Huang to provide particulars of her claims; and 4. extensions of time for Ms Huang to file her evidence in response to the Amended Notice of Motion and the making of a guillotine order preventing her from relying on any evidence served after 21 May 2018 without leave of the Court.
The hearing of the Amended Notice of Motion took place before Pembroke J on 11 and 12 October 2018. There was no appearance for Ms Huang on the first day of the hearing. She appeared with Mr Gibson as her McKenzie friend on the second day.
On 12 October 2018, Pembroke J delivered his judgment on the Amended Notice of Motion and made three orders staying the proceedings: Huang v Drumm [2018] NSWSC 1556 at [68] (12 October judgment). The first two orders were based on an abuse of process finding and were made pursuant to the Court's inherent jurisdiction and pursuant to s 67 of the Civil Procedure Act 2005 (NSW) (abuse of process stay orders). The third order stayed the proceedings pursuant to s 17 of the TTPA (TTPA stay order).
The 12 October judgment stated that a costs order would be made at a later date: at [68], which occurred when the 19 October costs order was made the following week. When the 19 October costs order was made, the Court noted that Mr Drumm proposed to file a notice of motion seeking orders that his costs be paid on an indemnity basis in a gross fixed sum amount and also that Mr Gibson (as a non-party to the proceedings) be ordered to pay some of Mr Drumm's costs.

[6]

The hearing of the notices of motion on 24 April

Mr Drumm was represented by Mr Elliott of counsel at the hearing of the notices of motion on 24 April 2019. He no longer has a solicitor representing him in the proceedings.
Ms Huang did not appear when the hearing was scheduled to commence at 10am. The hearing was adjourned for a short time to enable her to appear by videolink from Brisbane, which she did when the hearing resumed at 11.12am. Mr Gibson was given leave to address the Court as Ms Huang's McKenzie friend during the hearing.
When she appeared, Ms Huang contended there was no basis for the Court to proceed to deal with Mr Drumm's request for a gross sum costs order as Ms Huang had been granted leave and may succeed in the stay appeal, and the 19 October costs order was part of that appeal. She also made a submission that she had not been served with the exhibit to the affidavit of Keiran Breckenridge sworn 18 October 2018 (Breckenridge affidavit), upon which Mr Drumm relied in support of his motion.
The practical effect of the Court of Appeal's decision on 17 April 2019 was that the proceedings would remain stayed under s 17 of the TTPA regardless of the outcome of Ms Huang's stay appeal. It was also apparent that the 19 October costs order was not part of her stay appeal: Huang v Drumm [2019] NSWCA 77 at [10] and Ms Huang's summons seeking leave to appeal filed 18 October 2018.
As to the exhibit to the Breckenridge affidavit (KEB-1), Mr Drumm tendered copies of documents (exhibit E) which indicated that KEB-1 had been served on Ms Huang by email on 18 October 2018 and again on 18 April 2019, and had been referred to in a letter from Mr Drumm to Ms Huang dated 20 March 2019 to which no objection was raised. I was, therefore, satisfied that it had been served on Ms Huang.
In those circumstances, I proceeded to hear both notices of motion.
Mr Drumm's notice of motion sought a range of orders against both Ms Huang and Mr Gibson but, as noted in his written submissions and as confirmed by Mr Elliott at the hearing, Mr Drumm moved only on paragraphs 2(b) and (c) and paragraph 4 of his motion seeking orders that: 1. the 19 October costs order be set aside and replaced with an order that Ms Huang pay Mr Drumm's costs and disbursements on a fixed sum basis and interest be paid on those costs; and 2. Ms Huang pay the costs of Mr Drumm's notice of motion as fixed pursuant to s 98(4)(c) of the Civil Procedure Act.
Ms Huang's notice of motion was filed online at 11.24pm on 23 April 2019 and appears to have been served at 12.02am on the day of the hearing. It sought fourteen separate orders, some of which were responsive to Mr Drumm's motion, and some which were unrelated. The latter category included orders seeking to adjourn the proceedings pending "investigation by the Police and other Regulatory Bodies in relation to criminal complaints made against the Applicant/Defendant and his Legal Advisors…for Conspiracy to Pervert the Course of Justice, Perjury and other related Criminal offending", and for Ms Huang's claims in the proceedings to be heard and determined by an "Interstate Judge on the basis of Apprehended and/or Actual judicial bias operating in the Court of New South Wales".
During oral submissions, Ms Huang confirmed that she moved only on paragraphs 2, 3, 12 and 14 of her motion (T3: 28-46, T4: 26 -43, T4: 46-47, T6: 1-11, T55: 31-34 and T56: 1-7) to seek orders that: 1. Mr Drumm's application for a gross sum orders be declined; 2. Mr Drumm's request for costs be limited to the filing of his amended notice of motion on "18 August 2018 [sic]" [1] and those parts of his affidavits relating to jurisdiction under the TTPA; 3. Ms Huang be permitted to abridge the time of service of her evidence and notice of motion; and 4. Ms Huang be granted liberty to restore on three days' notice.
Mr Drumm did not contest paragraphs 12 and 14 of Ms Huang's motion seeking an abridgement of time and liberty to restore.

[7]

The evidence and submissions of the parties

In support of his application for a gross sum costs order, Mr Drumm relies on the Breckenridge affidavit and exhibit KEB-1. Mr Breckenridge is a solicitor employed by Lander & Rogers who were, until 15 January 2019, the solicitors on the record for Mr Drumm in these proceedings. The Breckenridge affidavit and KEB-1 detail the costs and disbursements incurred by Mr Drumm in these proceedings up to and including 18 October 2018, totalling $99,089.12.
The Breckenridge affidavit identifies that, as at 18 October 2018, Ms Huang had not paid costs orders made in favour of Mr Drumm, which are significant in value, and also identifies that Ms Huang's only property asset is her residential home located in Queensland which is subject to three mortgages to the Commonwealth Bank, Mr Gibson and a Ms Anita Oates.
Mr Drumm also relies on parts of the affidavits of Nicholas Cohen sworn on 6 April and 12 October 2018, which refer to costs orders obtained by Mr Drumm against Ms Huang in different proceedings, some of which have been made on a gross sum basis, as well as steps taken by Ms Huang in the past to challenge the outcomes of costs assessment processes.
Mr Drumm also relies on parts of his affidavit sworn on 6 April 2018 in which he gives evidence that his professional indemnity insurance excludes claims made outside Australia and that he has incurred more than $520,000.00 of costs and disbursements in respect of proceedings commenced against him by Ms Huang and Mr Gibson. He also gives evidence that he has exhausted his personal savings to meet the legal costs of those various proceedings.
In support of his application for an order that Ms Huang pay his costs of his notice of motion in a fixed amount, Mr Drumm relies on the costs agreement and an invoice from his counsel, Mr Elliott, both of which are part of exhibit G.
In light of that evidence, Mr Drumm submits that, in accordance with authorities such as Hamod v State of New South Wales and Anor [2011] NSWCA 375, Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 and Huang v Drumm (No 2) [2018] NSWSC 1853, this is a clear case where a gross sum costs order is warranted because: 1. the Court has sufficient material to make a gross sum determination based on the detailed and itemised time cost recordings, invoices and relevant costs agreements which are part of KEB-1; 2. the evidence indicates that Ms Huang is unlikely to engage in a cost assessment procedure in an efficient and appropriate way, including because it is likely she will seek meritless reviews or appeal any cost determinations made under the Legal Profession Uniform Law Application Act 2014 (NSW) and (LPULAA); and 3. the additional cost of engaging in a formal cost assessment process under the LPULAA would disadvantage Mr Drumm because it is unlikely that Ms Huang will be able to discharge those costs given the current outstanding costs orders against her and her limited financial means.
Ms Huang relies on an affidavit sworn by her on 23 April 2019 and written submissions in reply, which were served on Mr Drumm at 12.02am and 9.50am respectively, on 24 April 2019. Ms Huang's affidavit is 79 pages long, made up of 278 paragraphs and refers to an exhibit with 89 tabs. The exhibit referred to was not provided to Mr Drumm or the Court.
Due to its late service and length, Ms Huang's affidavit was read on the basis that Mr Drumm's counsel reserved the right to make objections and respond to it by supplementary written submissions, which he did on 2 May 2019 objecting to paragraphs [3] to [248] on the basis of form, relevance and hearsay, including because those paragraphs describe exhibits which were not tendered in evidence by Ms Huang.
In summary, paragraphs [3] to [38] of Ms Huang's affidavit relate to the position of Mr Gibson; paragraphs [39] to [104] relate to alleged dealings between Mr Gibson and Mr McIntosh (the defendant in the 2010 Supreme Court proceedings) and other proceedings, including in courts in New Zealand; and paragraphs [105] to [246] contain allegations about the CCST, Mr Drumm, his solicitors and his counsel in respect of other legal proceedings and events. Leaving aside the objections based on form and hearsay (which have merit), it is difficult to discern any relevance from paragraphs [3] to [246], particularly as no order is now being sought by Mr Drumm with respect to Mr Gibson and those paragraphs deal with events which pre-date the filing of these proceedings in the District Court on 30 March 2016. I have, therefore, concluded that they are of no assistance on the issues that I need to determine on the notices of motion.
The balance of Ms Huang's affidavit has some relevance to the present applications and I have taken those paragraphs into account in my consideration of the issues, although I note they mainly contain matters of submission and assertions without evidentiary support (see, for example, the reference at pages 70 to 79 to Mr Drumm taking out equity from his Auckland property and references to "false evidence" and "perjury").
The submissions made by Ms Huang and Mr Gibson in response to Mr Drumm's motion and in support of the orders she seeks are to the following effect: 1. there is no valid reason in this case to depart from the 19 October costs order, which would result in Mr Drumm's claim for costs being considered by a costs assessor in the ordinary way; 2. the application for gross sum costs should be declined as such orders are rarely made and Ms Huang has followed the standard track procedure in these proceedings; 3. Ms Huang has paid significant legal costs to date in respect of a range of proceedings and there is no basis to suggest she would not pay any future costs order assessed in the usual way; 4. in the past there has been a proclivity on the part of Mr Drumm's lawyers to include (in applications for gross sum costs orders) inflated costs that are not properly claimable; and 5. in relation to quantum, Mr Drumm should not be entitled to any costs incurred while the proceedings were before the District Court. Further, the costs claimed by Mr Drumm are disproportionate to the amount of work involved as a stay application had previously been made in the District Court and Pembroke J did not deal with his security for costs application.
In supplementary submissions received from Ms Huang on 25 April 2019, she has also asked the Court to set aside the 19 October costs order under r 36.15(1) of the Uniform Civil Procedure Rules 2005 (NSW).
Accordingly, the issues to be determined are: 1. whether the 19 October costs order should be set aside under r 36.15(1) of the Uniform Civil Procedure Rules; 2. whether the 19 October costs order should be set aside and replaced with a gross sum costs order in favour of Mr Drumm; 3. whether Mr Drumm should be limited to recovering only the costs of filing the Amended Notice of Motion and those parts of his affidavits relating to jurisdiction under the TTPA; 4. if a gross sum order is made, what the quantum should be and whether interest is payable; and 5. whether a gross costs sum order in Mr Drumm's favour should be made in respect of the costs of the notice of motion, the subject of the 24 April hearing.

[8]

The 19 October costs order should not be set aside under r 36.15(1) Uniform Civil Procedure Rules

The Court may, on sufficient cause being shown, set aside an order made irregularly, illegally or against good faith: r 36.15(1) of the Uniform Civil Procedure Rules.
Ms Huang's supplementary submission states that the 19 October costs order should be set aside because "there has been correction [sic] and fraud of the court processes" which is "beyong [sic] question", as "set out in her affidavit" which was read at the hearing. Ms Huang does not point to any particular parts of her affidavit that she relies on in support of that submission.
To the extent that Ms Huang relies on [263] to [269] of her affidavit, which purport to deal with the evidence and submissions before Pembroke J, they do not, in my view, support her submission that the 19 October costs order was made irregularly, illegally or against good faith. Those paragraphs contain a number of generalised and serious allegations about the nature of the evidence and submissions relied on by Mr Drumm without any apparent factual foundation. These include assertions of "false narrative evidence deliberately before the Court to misled [sic] it", "Fraud" and "false" evidence. They also cross-refer to a large number of paragraphs in the evidence and submissions before Pembroke J which she asserts are false or misleading without explaining how or in what way they are so.
To the extent Ms Huang relies on the other parts of her affidavit which deal with the history of these proceedings (from [249] to [251]), the references to matters such as "collu[sion]" and "disruptions….[which] have been criminal in substance and form" (see [249]-[250]), also appear, in the main, to be unsupported by facts. To the extent they refer to factual matters, the facts do not, in my view, support the assertions made.
As to the balance of the Huang affidavit, as previously noted, [3] to [249] deal with other events and proceedings which predate the commencement of these proceedings. They are not relevant to, and do not support, the submission that the 19 October costs order was made irregularly, illegally or against good faith.
Further, the terms of the 19 October costs order itself do not suggest that it was made in any irregular way.
Accordingly, I am not satisfied that sufficient cause has been shown that the 19 October costs order was made irregularly, illegally or against good faith and, therefore, refuse Ms Huang's application to set it aside.

[9]

Should the 19 October costs order be replaced with a gross sum costs order?

In my opinion, it is appropriate for the 19 October costs order to be set aside, and for an order to be made in its place for Mr Drumm's costs to be paid by Ms Huang in a gross sum instead of assessed costs pursuant to s 98(4)(c) of the Civil Procedure Act. This is for the following reasons.
Pursuant to r 36.16(3A) of the Uniform Civil Procedure Rules, the Court has power to set aside or vary an order if a notice of motion is filed within 14 days after the order is entered.
Mr Drumm's notice of motion was filed on 23 October 2018, within 14 days of the 19 October costs order. Accordingly, the Court has power to set aside the 19 October costs order.
The Court also has power to make an order that a party to whom costs are to be paid be entitled to a specified gross sum rather than assessed costs, otherwise known as a gross sum costs order: s 98(4)(c) of the Civil Procedure Act.
The discretion to order gross sum costs is not confined and may be exercised whenever the circumstances warrant its exercise, having regard to the scope and purpose of the provision: Hamod v State of New South Wales and Anor [2011] NSWCA 375 at [813]; Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213.
The factors that merit particular consideration when exercising the discretion to make a gross sum costs order include where the assessment of costs would be protracted and expensive, where it appears that the party obliged to pay the costs would not be able to meet a liability of the order likely to result from the assessment and where a gross sum costs order would assist in bringing finality to the litigation: Harrison v Schipp (2002) 52 NSWLR 738; [2002] NSWCA 213 at [21] - [22]; Beach Petroleum NL v Johnson (1995) 57 FCR 119; Hadid v Lenfest Communications Inc [2000] FCA 628; Fewin Pty Ltd v Burke (No 3) [2017] FCA 693 at [49]. In my view, each of those factors are present in this case.
Based on the evidence before the Court, this is not a case where the parties are likely to reach agreement as to the amount of costs to be paid to Mr Drumm by Ms Huang pursuant to the 19 October costs order. To the contrary, it seems inevitable that, in the absence of making a gross sum order, a formal costs assessment process will be necessary, and it is likely to be contested and drawn out.
Ms Huang has contested and appealed from costs assessments in the past (see, for example, [54] - [59] affidavit of Nicholas Cohen sworn 6 April 2018 in relation to Ms Huang's two summonses seeking to appeal from the costs assessment 2016/309421) and it may be expected that she will do so again if a gross sum cost order is not made.
The additional costs associated with a formal cost assessment process and any appeal is also likely to greatly disadvantage Mr Drumm given the amounts that are already owing to him by Ms Huang pursuant to other costs orders and his own financial position.
The unchallenged evidence indicates that Ms Huang owes Mr Drumm the amount of $154,949.00 in respect of legal costs to which he is entitled under other gross sum costs orders and assessed costs. This comprises an amount of $119,949.00 (see [24] Breckenridge sworn 18 October 2018), plus an amount of $35,000.00 (from a gross sum costs order made by Davies J in December 2018: Huang v Drumm (No 2) [2018] NSWSC 1853). It also indicates that Ms Huang is liable to pay Mr Drumm's legal costs under other costs orders which have not been formally assessed, but which have been estimated to be worth approximately $80,000 - $100,000 (see [25] Cohen affidavit sworn 6 April 2018).
There is also real doubt about Ms Huang's ability to satisfy any costs Mr Drumm would incur in a formal costs assessment process, as well as his taxed costs, given Ms Huang's only asset appears to be her home in Queensland which is subject to three existing mortgages, and her failure to pay Mr Drumm what he is owed pursuant to his outstanding costs orders to date.
As to Mr Drumm's financial position, the evidence indicates that he has incurred legal costs to date of around $400,000.00 in relation to the various legal proceedings commenced against him by Ms Huang alone, he has expended all his personal savings on legal costs and has no insurance cover in respect of these proceedings: see [65], [69] and [72] Drumm affidavit.
I am not persuaded by Ms Huang's submission that a gross sum costs order should not be made in place of the 19 October costs order because they are rare.
The authorities note that the discretion to award gross sum costs is unconfined. They have also noted that gross sum costs orders are not limited to complex and long cases and have been used increasingly, which may derive from the case management principles set out in ss 56 and 60 of the Civil Procedure Act: Huang v Drumm (No 2) [2018] NSWSC 1853 at [14] and [28]; Bobb v Wombat Securities Pty Ltd & Ors (No 2) [2013] NSWSC 863 at [6]; Hamod v State of New South Wales [2011] NSWCA 375 at [813].
It is also apparent that gross sum costs orders have been made in favour of Mr Drumm previously in the 2015 Local Court proceedings and in Supreme Court proceedings number 2017/176611 ([24] Breckenridge affidavit), as well as in Huang v Drumm (No 2) [2018] NSWSC 1853.
The fact that Ms Huang has paid legal costs to date in an amount of approximately $151,300.00 ([272]-[275] Huang affidavit) is also not persuasive given they have been paid to her own legal representatives and not on account of costs orders in favour of Mr Drumm or other parties that she has sued.
I also do not accept Ms Huang's submission that Mr Drumm's gross sum costs application should be declined because she has, she submits, conducted her case following "standard track procedures".
To the extent using "standard track procedures" is a reference to Ms Huang conducting these proceedings in accordance with directions and orders made by the Court, it is apparent from a review of the procedural history that the Court has provided Ms Huang with numerous indulgences. These include being provided with multiple extensions of time in which to file her evidence in response to the Amended Notice of Motion, and being permitted to appear by videolink late in the morning on the day of the hearing before me to suit her convenience, despite not having applied to do so in the usual fashion. She was also given leave to rely on her very lengthy affidavit and written submissions which were received on the morning of the hearing and in apparent breach of prior Court orders and the Court rules: r 18.4 Uniform Civil Procedure Rules.
In any event, and as was confirmed in oral and written submissions by his counsel, Mr Drumm does not seek gross sum costs on the basis of any alleged unreasonable conduct by Ms Huang in these proceedings. His application is premised on other discretionary factors which, for the reasons set out above, support a gross sum cost order being made in these proceedings in place of the 19 October costs order.
These particular proceedings have been ongoing since 2016. Mr Drumm has been put to the time and expense of making two applications to stay these proceedings pursuant to the TTPA. Both of his TTPA applications were made in a timely fashion, the first soon after Ms Huang commenced the proceedings in the District Court, and the second, soon after the proceedings were transferred to the Supreme Court. Despite Ms Huang's stay appeal, the proceedings remain stayed pursuant to the TTPA stay order. At the same time, Mr Drumm has had to respond to the claims made by Ms Huang and the other interlocutory steps in the proceedings, which the Court record indicates have been extensive.
Mr Drumm should not now be subjected to the inconvenience, expense and financial risks associated with a protracted costs assessment process, including possible appeals. A gross sum costs order should assist in bringing finality to the proceedings and is, in my view, entirely consistent with case management principles requiring the just, quick and cheap resolution of issues in the proceedings: s 56 Civil Procedure Act.

[10]

Should Mr Drumm's costs be limited to the Amended Notice of Motion and those parts of his affidavits relating to the TTPA stay?

Ms Huang's primary submission is that she should not be liable for the costs Mr Drumm incurred when the proceedings were before the District Court or the costs incurred in relation to Mr Drumm's application for security for costs. Ms Huang contends that any costs order should be limited to his costs of filing the Amended Notice of Motion and those parts of the affidavits he relied on in support of the TTPA stay order.
I do not accept Ms Huang's submissions that Mr Drumm's costs should be limited in that way.
These proceedings were transferred to the Supreme Court from the District Court pursuant to s 144(2) of the Civil Procedure Act 2005 (NSW). As a result, they continued as if they had been commenced in the Supreme Court on 30 March 2016 (being the date on which they were commenced in the District Court): s 144(3)(a)(i) Civil Procedure Act, including with the same proceedings number (2016/96823). I also note that the Court has power to make orders as to costs with respect to any step taken in the proceedings prior to them being transferred to the Supreme Court on 29 May 2017: s 144(7) Civil Procedure Act.
It is, therefore, incorrect to suggest (as Ms Huang did) that the District Court proceedings were separate proceedings and the related costs should be or were treated differently.
By obtaining the TTPA stay, Mr Drumm succeeded in these proceedings. That success was recognised by the terms of the 19 October costs order which did not limit Mr Drumm's entitlement to costs to those that related to the TTPA stay order sought under the Amended Notice of Motion. The 19 October costs order refers to Mr Drumm's "costs of the proceedings", which covers all of Mr Drumm's costs (save for those dealt with by other orders) while the proceedings were before both the District and Supreme Courts.
I also do not accept Ms Huang's submissions that Mr Drumm should not be entitled to recover the costs relating to the security for costs application. Those costs are covered by the terms of the 19 October costs order and should be paid and otherwise dealt with in the same way as the general costs of the proceeding: r 42.7 Uniform Civil Procedure Rules.
Mr Drumm's security for costs application did not fail, but was an application that ultimately did not need to be determined given the conclusion reached in the 12 October judgment that the proceedings should be permanently stayed. Even if it had failed, the Court does not generally dissect the different issues on which a party succeeded or failed in making costs orders: Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38].
Having regard to the conclusion in the 12 October judgment at [64]-[65] that the Court would not have been prepared to allow the proceedings to continue without Ms Huang providing security for Mr Drumm's future costs, it was not an unreasonable application to make. There is also no evidence to suggest that the costs relating to that application were unreasonably incurred.
Ms Huang also contends that the costs claimed by Mr Drumm are exaggerated, unreasonable and disproportionate as the stay application before Pembroke J ran for two days compared to the hearing in the District Court before Judge Williams, which was "relatively short". That submission is unconvincing in circumstances where Ms Huang did not appear on the first day of the hearing before Pembroke J and at least some of the second day was occupied by her and Mr Gibson making oral submissions.
Ms Huang points to further lay evidence prepared for the stay application before Pembroke J as being unnecessary and Mr Drumm's costs being disproportionate in circumstances where there was affidavit evidence filed by Mr Drumm, in the form of an affidavit of Mr Thornley sworn 28 April 2016, before the District Court. The difficulty with that submission is that Ms Huang also contends that Mr Drumm's costs should exclude those incurred when the proceedings were before the District Court. This would mean that Mr Drumm would not be entitled to claim any costs for the preparation of evidence in respect of his successful TTPA application. That submission should be rejected given his success in obtaining that stay.
In any event, Mr Drumm's service of further lay evidence in April and October 2018 for the purposes of the Amended Notice of Motion was justified because: 1. Ms Huang had objected to Mr Thornley's District Court affidavit on the basis that he did not have "first hand knowledge of event [sic] he sets out in his affidavit in support": [250] Huang affidavit. This led to an affidavit from Mr Drumm duplicating and expanding on Mr Thornley's affidavit; 2. Ms Huang had previously made submissions that Mr Thornley had committed perjury in relation to his affidavit: see Huang v Attapallil & Ors [2017] NSWCA 181; Huang v Attapallil (No.2) [2017] NSWSC 1382. It seems reasonable for Mr Drumm to put on evidence when Ms Huang had challenged Mr Thornley in such a serious way; and 3. evidence had to be put before the Court that Ms Huang had been served with the Amended Notice of Motion and was on notice of the hearing before Pembroke J on 11 October 2018 in the context where she did not appear on the first day. That material is in [1] to [30] of the Cohen affidavit sworn 12 October 2018. While Mr Cohen's affidavit was ultimately rejected by Pembroke J, parts of it were read in support of Mr Drumm's motion.
Ms Huang relied on Young AJ's comments in Gibson v Drumm [2016] NSWSC 570 in support of her submission that the costs claimed by Mr Drumm's previous lawyers have been inflated, are "truly disgraceful" and that to make a gross sum costs order on the basis of the materials before the Court would enable those inflated fees to be hidden from proper review. I do not consider that his Honour's comments assist her. In that case, Young AJ granted Mr Drumm a gross sum costs order and, in doing so, raised issues with five items totalling $640.00 from an itemised schedule of costs in respect of a claim which was worth more than 10 times that amount.
Regardless, other than objections of a broad nature, Ms Huang did not seek to identify any items in the evidence relied on by Mr Drumm, including in exhibit KEB-1, which she contends are exaggerated, unfair, unreasonable or grossly inflated.

[11]

Quantum of the gross sum cost order

Before making a gross sum costs order, the Court should have sufficient confidence that the material before it enables it to arrive at an appropriate sum for the costs order and it can do so on a logical, fair and reasonable basis: Harrison v Schipp (2002) 52 NSWLR 738; [2002] NSWCA 213 at [22]; Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at [123]; Bobb v Wombat Securities Pty Ltd (No 2) [2013] NSWSC 863 at [8].
In assessing the quantum of a gross sum costs order, the Court is not required to undertake a line by line analysis of the costs claimed but is entitled to take a broad-brush approach: Harrison v Schipp (2002) 52 NSWLR 738; [2002] NSWCA 213.
The Court may take into account evidence from the solicitor for the successful party and does not necessarily require evidence from a costs consultant. It may also take into account its own observations of the proceedings and the judge's own experience: Bobb v Wombat Securities Pty Ltd & Ors (No 2) [2013] NSWSC 863 at [10] per Beech-Jones J.
In this case, the Court has evidence before it of solicitor's costs, counsel fees and other disbursements incurred by Mr Drumm in relation to the proceedings as covered by the 19 October costs order. I am satisfied that this material can be relied on to make a fair and reasonable gross sum costs order as between the parties.
The solicitor's costs are set out in itemised time recordings of lawyers working at Lander & Rogers (the then-solicitors for Mr Drumm) for the period from 30 March 2016 to 18 October 2018 (see pages 1 - 17 and page 65A of exhibit KEB-1), which identify the hourly rates, tasks undertaken and time spent on particular items of work undertaken by each lawyer (Schedules of fees). Exhibit KEB-1 also includes the cost agreements between Lander & Rogers and Mr Drumm (see pages 18 - 36), which names the lawyers who will work on his matters and their hourly rates, and notes that other lawyers and administrative assistants may assist as needed.
The solicitor's costs referred to in the Schedules of fees total $68,605.00 (exclusive of GST). In his supplementary written submissions, Mr Drumm excludes a number of items contained in the Schedules of fees for the period 30 March 2016 to 17 October 2018, which reduces the costs down by $7,275.00 to $61,330.00. I make the following observations about the solicitor's costs claimed: 1. The rates charged by the solicitors who did the work vary between $230 to $390 per hour. In my view, those rates are well within the appropriate range bearing in mind the seniority of the solicitors involved and appear, on the whole, to be on the modest side. 2. The items that make up the amount of $61,330.00 do not appear to include costs incurred by Mr Drumm in respect of Senior Deputy Registrar Hedge's orders on 7 February 2018, Pembroke J's orders on 19 April 2018, or Ms Huang's jurisdiction appeal or stay appeal. There is, therefore, no basis for the submission made by Ms Huang that Mr Drumm is seeking to recover his costs in relation to the jurisdiction appeal or other parts of these proceedings which are subject to other costs orders. 3. There are no costs included for the period 24 September 2018 to 9 October 2018, being the period during which there was no solicitor from Lander & Rogers on the record for Mr Drumm in these proceedings. This responds to the concern raised by Ms Huang that the costs claimed may include solicitor's costs during a period when there was no solicitor acting for Mr Drumm. 4. It is apparent that there has been time spent on the proceedings by solicitors working on the matter which has not been claimed. See for example, items 334, 470.
The solicitor's costs of $61,330.00 should, in my opinion, be adjusted further in four ways. First, the costs of preparing Mr Cohen's affidavit sworn 12 October 2018 (which was rejected by Pembroke J) should be reduced by $1,700.00 to allow $300.00 for its preparation, rather than approximately $2,000.00 (see items 460, 462, 463 and parts of items 466 and 469). Second, I would disallow the costs of the additional fee earner referred to in Exhibit KEB-1 totalling $910.00 (see items 326, 377-381 and 392) as she is not legally qualified and is employed as a Senior Personal Assistant. Third, I would discount the solicitor's costs by 20% to reflect that Mr Drumm's costs are to be paid on an ordinary and not an indemnity basis. Fourth, I would reduce the costs by an additional 15% to reflect the broad-brush approach to the quantification of costs on a gross sum basis and to allow for some imprecision. Taking those matters into account, I calculate the solicitor's costs to be $39,929.60.
Mr Drumm also claims $26,540.00 (exclusive of GST) for counsel's costs and relies on the invoices and costs agreements in exhibit KEB-1. The invoices itemise the work done by junior counsel, Dean Elliott and Sam Sykes, during the period from 17 April 2016 to 16 October 2018, at the rates of $240 per hour and $200 per hour respectively. A review of those invoices indicates that counsel has discounted, and not charged for, some of their work in relation to the proceedings and that Mr Drumm is not claiming work undertaken by Mr Elliott in November 2011 regarding the notices to produce the subject of Senior Deputy Registrar Hedge's orders on 7 February 2018. Counsel's costs appear to me to be very reasonable and I do not see any basis for adjusting them further.
Mr Drumm claims other disbursements of $2,424.12, relating to transcription services, filing fees, search fees, courier charges, postage charges and travel costs. I consider it appropriate to adjust that figure down to $1,851.50, to reflect the total of the invoices appearing at pages 58-65 of KEB-1 which are relied on in support of the other disbursements.
Taking into account all the above, and noting that it is not the result of precise calculation but a fair broad-brush assessment based on the material before the Court, I consider a reasonable gross sum figure for Mr Drumm's costs to be $68,000.00 (exclusive of GST).

[12]

Should an order for interest be made?

Mr Drumm also seeks an order that Ms Huang pay interest on the amount of costs and disbursements that he has actually paid to his legal advisors from the date of payment until such time as Ms Huang pays the gross sum costs order.
The Court has power to make an order that interest be payable on costs that have already been paid by a successful party: s 101(4) of the Civil Procedure Act. The payment of interest on costs is intended to compensate a party who is out of pocket in respect of relevant costs that have been actually paid: E Co [a pseudonym] v Q [a pseudonym] (No 5) [2019] NSWSC 844 at [108]; Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd [2014] NSWCA 158.
There is no requirement, before an order for payment of interest is made, for the Court to be satisfied that the circumstances of the case are out of the ordinary: Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd [2014] NSWCA 158 at [403], citing Joseph Lahoud & Anor v Victor Lahoud & Ors [2006] NSWSC 126 at [82].
Ms Huang did not advance any particular submission in relation to this order. I have, however, proceeded on the basis that she objects on essentially the same grounds (referred to above) upon which she relied in seeking to limit the costs to which Mr Drumm should be entitled - namely that the costs Mr Drumm claims are excessive, unnecessary and duplicative.
I have already considered these factors and have rejected them. Further, to the extent there are excessive, unnecessary or duplicative solicitor's costs, they should be sufficiently negated by my adjustments to the solicitor's costs claimed. In those circumstances, I do not consider that the matters referred to in Ms Huang's submissions disentitle Mr Drumm to an order for interest.
There is some evidence before the Court that suggests Mr Drumm has been meeting the costs of the various proceedings he has been involved in ([68] Drumm affidavit) but there is no evidence of when and in what amounts payments have been made by him to his legal advisors in respect of the costs of these proceedings which are now being claimed.
In the absence of some positive evidence to show he is "out of pocket" and needs to be compensated in respect of the costs of these proceedings, and in circumstances where Mr Drumm did not make a submission that Ms Huang's conduct in running the proceedings has led to increased costs, I am not satisfied that I should exercise my discretion and make an order for interest to be payable on costs in the terms sought, being from the dates of payments made by Mr Drumm in the past to his legal advisors.
It is appropriate to make the usual order in respect of interest on legal costs. Accordingly, and pursuant to s 101(4) and (5) of the Civil Procedure Act, interest will be payable on the gross sum amount of $68,000 at the prescribed rate of interest from the date of making the gross sum order.

[13]

Costs of this application

The general rule is that costs follow the event unless it appears to the court that some other order should be made: r 42.1 Uniform Civil Procedure Rules.
Mr Drumm has succeeded in obtaining the orders sought in his notice of motion that the 19 October costs order be set aside and replaced with a gross sum costs order. By contrast, Ms Huang has not succeeded in obtaining the orders she pressed in her motion that Mr Drumm's request for a gross sum costs order be declined and that his costs be limited to the cost of filing the Amended Notice of Motion and those parts of the affidavits which related to the question of jurisdiction under the TTPA.
As Mr Drumm has succeeded in obtaining relief and Ms Huang has not, I do not consider it appropriate to apply anything other than the general rule in this case with the result that Ms Huang should pay Mr Drumm's costs of his notice of motion and in responding to Ms Huang's notice of motion dated 23 April 2019.
Consistent with my reasoning above, I also consider it appropriate for Mr Drumm's costs in relation to his notice of motion and Ms Huang's notice of motion to be fixed and paid a gross sum basis.
As to quantum, Mr Drumm seeks the amount of $4,525.00 (exclusive of GST) in respect of costs relating to his notice of motion. Mr Elliott's invoice dated 24 April 2019 (part of exhibit G) itemises the work he has done in preparing for and attending the hearing of Mr Drumm's notice of motion during the period from 15 March 2019 to 24 April 2019 and is calculated at the hourly rate of $300.00 and allowing for the half-day rate of $1,300.00 for the hearing on 24 April 2019.
Given Mr Elliott's rates are on the lower scale for junior counsel and the hearing before me took one full day, I do not consider these costs should be adjusted further and am satisfied that I can rely on the invoice to support the making of a gross sum order in the amount of $4,525.00.
Mr Drumm claims the amount of $1,800.00 for his costs in responding to Ms Huang's notice of motion dated 23 April 2019. Although no invoice has been provided to the Court in support of that amount, I have proceeded on the basis that it comprises Mr Elliott's fees for work done on the supplementary written submissions and objections to Ms Huang's affidavit which were served on 2 May 2019.
Had an invoice been provided, I anticipate I would have accepted it in full. In its absence, I am only prepared to fix Mr Drumm's costs in relation to Ms Huang's notice of motion in an amount of $900.00, allowing 3 hours for Mr Elliott's time at $300.00 per hour.

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