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Representation: Counsel:
T O’Brien/S Gerber (Applicant)
A M Hochroth SC/M Mellos (Respondents)
Solicitors:
Gilbert + Tobin (Applicant)
Quinn Emanuel (Respondents)

File Number(s): 2025/224219

JUDGMENT

Nature of the application

1. By my judgment delivered on 15 October 2025 (Re Mayne Pharma Group Ltd [2025] NSWSC 1204) (“Primary Judgment”), I determined complex proceedings (“Proceedings”) relating to the position in respect of a scheme of arrangement, which contemplated the acquisition of all of the ordinary shares in Mayne Pharma Group (“MPG”) by the Second Defendant, Cosette Australia Bidco Pty Ltd (“Cosette BidCo”). The primary question raised by the Proceedings, in an Amended Cross-Claim filed by the First Defendant/Cross-Claimant, Cosette Pharmaceuticals Inc (“Cosette”), was whether Cosette had validly terminated a Scheme Implementation Deed dated 20 February 2025 (“SID”). I dismissed that Amended Cross-Claim and held, in substance, that the SID had not been validly terminated. I observed (at Primary Judgment [514]) that:

“MPG has been successful in the proceedings and the Cosette Parties have failed to establish their claims. Costs should follow the event in the ordinary way and, unless any application is made for costs on a special basis, by reason of any earlier offers exchanged between the parties, the Cosette Parties must pay MPG’s costs of the proceedings as agreed or as assessed.”

2. MPG did not seek any order for costs against Cosette and Cosette BidCo (together, “Cosette Parties”) on a special basis. However, by Interlocutory Process dated 24 February 2026, MPG sought a gross sum costs order in the amount of $13,674,364.24 plus interest, and an order that the Cosette Parties pay its costs of that Interlocutory Application. The amount claimed by MPG was subsequently reduced in expert evidence and submissions to $13,672,719.59.

Applicable principles

3. I now address the applicable principles, which are well established, and several cases to which the parties gave particular attention.

4. Section 98 of the Civil Procedure Act 2005 (NSW) confers a discretionary power to determine costs on the Court and requires that that discretion be exercised judicially. Section 98(4) in turn provides that the Court may make an order to the effect that a party to whom costs are to be paid is entitled to a specified gross sum instead of assessed costs. This power is commonly exercised where costs have been incurred in a lengthy or complex case, although it is not in its terms limited to such a case: Simone Starr-Diamond v Talus Diamond (No 4) [2013] NSWSC 811 at [8]. A gross sum costs order may also be made to avoid the expense, delay and aggregation involved in litigation arising out of an assessment: Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 (“Harrison v Schipp”). Where a gross sum costs order is to be made, the Court is not required to undertake a detailed examination of the kind which would be undertaken in a costs assessment in determining a gross sum payable, and will apply “a broad brush” approach: Hadid v Lenfest Communications Inc [2000] FCA 628 at [35]; Harrison v Schipp at [22].

5. Mr Hochroth, with whom Ms Mellos appeared for the Cosette Parties, placed particular emphasis on Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 (“Idoport”). I recognise that that decision is often cited in respect of the applicable principles. Mr Hochroth emphasised Einstein J’s observation at [13] that:

“In adopting a broad-brush approach to gross sum awards the Courts have invariably applied a discount to the amounts claimed and in many cases a substantial such discount.”

6. His Honour also there referred to the discounts applied in several cases decided between 1998 and 2005, although I give limited weight to a sample of discounts applied in cases decided more than 20 years ago. His Honour rightly then observed (at [14]) that:

“It is however trite to observe that this is an area in which it is generally imprudent to endeavour to extrapolate from the circumstances of one piece of litigation to those of another. Having said that it is certainly the case that a prudent approach is an informed approach.”

Notwithstanding that salutary warning, Mr Hochroth primarily relied on Idoport for the significant discount which Einstein J there applied to the amount of the gross sum costs there claimed, after finding (at [152]) that the defendants had there adopted a “Rolls-Royce approach” to the litigation.

7. I should make two observations in that regard. First, I understand his Honour’s reference to a “Rolls-Royce approach” to that litigation to indicate a luxurious approach to proceedings which gives limited weight to cost effectiveness or proportionality, consistent with the common perception of “Rolls-Royce” motor vehicles as particularly luxurious and particularly expensive. There is here no factual basis for a claim that MPG, or indeed the Cosette Parties, adopted a “Rolls-Royce” approach to the Proceedings. Neither expert expresses the view that either party had conducted the Proceedings in that manner. My observations of the conduct of the Proceedings were that to the contrary, the parties proceeded in an efficient, rather than a luxuriant, manner in addressing very complex documentation, the preparation of numerous affidavits and substantial expert evidence, and very complex legal issues, within a very short time period. No question of any discount applicable to a “Rolls-Royce” approach to litigation arises here and the actual discount applied in Idoport is of little assistance given that significant distinction.

8. Second, the concept of a “discount” in a gross sum costs application can arise in two different ways in the cases. First, absent any expert evidence as to costs, Courts in gross sum costs applications often take account of common experience to recognise the proportion of solicitor/client costs that may be recoverable on an ordinary basis in an assessment and can “discount” solicitor/client costs to determine gross sum costs on that basis. It is not necessary or appropriate to take that approach in this case where there is detailed expert evidence as to costs. Second, where there is expert evidence as to costs, a Court may apply a residual discount to recognise that a full assessment has not occurred, although that will not necessarily be done, as Brereton J noted in Hancock v Rinehart (Lump Sum Costs) [2015] NSWSC 1640 (“H**ancock”) which I address below.

9. Mr Hochroth also drew attention to Seven Network Ltd v News Ltd [2007] FCA 2059 (“Seven Network”), where Sackville J also applied a discount to the costs claimed in a gross sum costs application. Mr Hochroth rightly acknowledged that that case was also a very different case to the present case, where it continued over a very long period between commencement and determination, by contrast to the abbreviated timetable for this case. Sackville J also there rightly observed (at [34]) that:

“Costs assessments made in previous cases are of limited assistance in determining an appropriate order in the present case. Each award must depend on the particular circumstances and on the evidence adduced by the parties.”

10. Sackville J there referred (at [33]) to the percentage of costs that had been allowed in cases between 1998 and 2005, and I again find limited assistance in a result of a second survey of discounts applied in cases decided more than 20 years ago. I recognise that Sackville J there found that Seven should pay Telstra’s costs in an amount representing 62.75% of Telstra’s actual costs and disbursements. However, that does not provide a basis to adopt that percentage discount in other cases in different circumstances.

11. Mr Hochroth also referred to my decision in Re Aquaqueen International Pty Ltd [2015] NSWSC 500, where I accepted a solicitor’s evidence that she ordinarily recovered 75% of solicitor/client costs on assessments and observed that that evidence was consistent with the Court’s experience. That proposition is of limited relevance here, where it is directed to the practice that may be applied in estimating a solicitor’s professional costs, where that matter is not addressed by expert evidence. That issue does not arise in this case.

12. In Hamod v State of New South Wales [2011] NSWCA 375 at [816]–[817] (“Hamod”), Beazley JA (with whom Giles and Whealy JJA agreed) summarised several factors relevant to the making of a gross sum costs order as follows:

“The terms of s 98(4), together with the more general considerations reflected in the Civil Procedure Act, ss 56(1), 57(1)(d) and 60, suggest the factors that merit particular consideration include: the relative responsibility of the parties for the costs incurred (for example, Harrison v Schipp); the degree of any disproportion between the issue litigated and the costs claimed; the complexity of proceedings in relation to their cost; and the capacity of the unsuccessful party to satisfy any costs liability: Ritchie’s Uniform Civil Procedure NSW at [s 98.45].

The exercise of the power conferred by s 98(4) is particularly appropriate where the costs have been incurred in lengthy or complex cases and it is desirable to avoid the expense, delay and aggravation likely to be involved in contested costs assessment. This may arise either from the likely length and complexity of the assessment process: Beach Petroleum NL v Johnson (No 2) at 120; Charlick Trading Pty Ltd v Australian National Railways Commission; Australasian Performing Rights Association Ltd v Marlin [1999] FCA 1006; 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: Harrison v Schipp; Sony Entertainment (Aust) Ltd v Smith (2005) 215 ALR 788 at [90], [194]–[195]; Hadid v Lenfest Communications Inc [2000] FCA 628.”

13. The question of a further discount, after the Court quantified costs incurred on a gross sum basis, was further considered by Brereton J in Hancock at [56]–[58], in a passage quoted with apparent approval by Bell CJ in Brown v The Stables Perisher Management Pty Ltd (No 2) [2022] NSWSC 902 at [37], as follows:

“The first defendant submits that there should be a further global percentage reduction of 15%, for two main reasons: first, because on assessment, even on the indemnity basis, a successful party invariably recovers something less than its actual costs, typically 15% where the assessment is on an indemnity basis; and secondly, the necessarily broad-brush approach of the court to assessment on a lump sum basis — involving some risk that the sum includes costs that would not be recovered on assessment — coupled with the savings to the costs creditor in time and costs through avoiding a detailed assessment, and the loss to the costs debtor of the opportunity to scrutinise and object to a detailed bill, has resulted in a practice of applying a discount on lump sum assessments.

While it is undoubtedly the usual practice of the court when making a lump sum costs order to apply a discount for the reasons mentioned, that does not mean that the Court must apply a percentage discount to the sum sought by the successful party, and the Court ‘must be astute not to cause an injustice to the successful party’ by applying ‘an arbitrary “fail safe” discount on the costs estimate submitted to the court’. Thus if the court can be confident that there is little risk that the sum includes costs that might be disallowed on assessment, the case for a discount is seriously undermined.

Where a gross sum is assessed on an indemnity basis, and there is no evidence of unreasonableness, it may be inappropriate to apply any discount, although one may nevertheless be appropriate if there is evidence that the successful party ‘errs on the side of excessiveness [as in excessive use of legal services]’”. [footnotes omitted]

His Honour also observed at ([59]–[60]) that the process for which the discount is ordinarily intended to provide will have taken place if unreasonable costs and out-of-scope issues have already been addressed.

14. In Ahern v Aon Risk Services Australia Ltd (No 2) [2022] NSWCA 39 (“Ahern”), which has aspects in common with the position in this case, there was unchallenged evidence as to the actual costs incurred but a dispute as to expert evidence and as to the amount of costs to be allowed. The Court of Appeal summarised the applicable principles at [15]–[18] as follows:

“The principal purpose of a specified gross sum costs order under s 98(4)(c) is to avoid the expense, delay and aggravation likely to be involved in a contested costs assessment process: Hamod at [816]–[817]. As Basten JA noted in James v Australia and New Zealand Banking Group Ltd [2017] NSWCA 84 at [3]:

‘The power to make such an order is governed by the obligation of the court to give effect to the overriding purpose of the Act, as identified in Pt 6 of the Civil Procedure Act. The court is to ensure that the issues between the parties are resolved “in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute” (Civil Procedure Act, s 60); that obligation extends to the disposal of disputes as to costs. Although questions of costs undoubtedly play an important practical role in commercial litigation, disputes as to quantification are ancillary to the primary issues in dispute and consequential upon the resolution of the primary issues. Costs provide an opportunity for ongoing litigation about “non-essential issues” which should be resolved with as little technicality and expense as reasonably practicable.’ [footnotes omitted]

Primary considerations relevant to the exercise of the s 98(4)(c) discretion 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 cost; and the capacity of the unsuccessful party to satisfy any costs liability’: Hamod at [816]; see also Kostov v Zhang (No 2) [2016] NSWCA 279 at [22] ; eInduct Systems Pty Ltd v 3D Safety Services Pty Ltd (No 2) [2015] NSWCA 422 at [30] .

The power to award a gross 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 734 at 743; [2002] NSWCA 213 at [22]. The power may 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 at [818].

If it considers it appropriate to make the order, the Court may adopt a ‘broad brush’ approach to quantification, as to require the Court to undertake a detailed examination of the kind carried out in a formal costs assessment would defeat the purpose of the order: Harrison v Schipp at 743; Penson v Titan National Pty Ltd (No 3) [2015] NSWCA 121 at [7]. The costs ordered should be “based on an informed assessment of the actual costs having regard to the information before the court (for example, by relying on costs estimates or bills)”: Hamod at [820]. Courts have typically applied a discount when assessing costs on a gross sum basis, though the aptness of a discount primarily depends on the accuracy and reliability of the costs evidence available to the Court: Hamod at [814].”

15. The Court of Appeal also there observed (at [42]–[43]), in respect of the “discount” that may be allowed in making a gross sum costs order that:

“In making a gross sum costs order, the Court is entitled to take into account that if assessed on the ordinary basis, the usual outcome is that the costs recovered represent a proportion in the range of 60 to 85% of the total costs incurred (Bechara v Bates [2016] NSWCA 294 at [69]). Accordingly, in assessing the gross sum costs order, the Court should apply an ‘impressionistic’ or ‘broad brush’ approach in applying a discount to reflect that reality: Hamod at [820]; Bechara at [14].

That approach has resulted in discounts ranging between 10% and 30% being applied, although the ultimate discount or deduction applied must take into account the evidence and circumstances of the particular case. For examples of such cases, see Eliezer (No 2) at [30] (20%); and Penson v Titan (No 3) at [24] (30%).”

16. In Ahern, the Court of Appeal applied (at [44]) a discount of the second character noted above, of approximately 30% of the actual costs incurred, where substantial costs were claimed in respect of solicitors and senior and junior counsel’s fees in respect of a hearing of only one day, and observed (at [45]) that that discount “accommodates the contingencies which would arise in a formal costs assessment process” as well as recognise that there were issues as to which costs assessors might reasonably take different views. The circumstances of that case were very different from this case, where the substantial costs here claimed reflect a lengthy and complex case prepared for hearing in circumstances of urgency.

17. Mr Hochroth also referred to Zarfati v McMillan [2023] NSWSC 839, where Wright J also reviewed the uncontroversial principles applicable to awarding a gross sum costs order (at [9]) and referred to the observation in Ahern that, on an assessment of costs on the ordinary basis, the costs recovered usually range from 60–85% of the total costs incurred. His Honour also reviewed discounts which had been allowed in later cases as to lump sum costs orders, in a very wide range between 20% up to 60%. His Honour observed, helpfully, with reference to Ahern at [18] and Hamod at [814] that:

“The aptness and amount of a particular discount will, however, depend primarily on the accuracy and reliability of the costs evidence available to the Court and also on the particular circumstances of the case. …”

Evidence led in the application

18. In support of its application for a gross sum costs order, MPG read the affidavit dated 24 February 2026 of its solicitor, Ms Whitby. She outlined the background to the Proceedings and the highly expedited time frame within which they were conducted and identified a significant range of issues raised in these proceedings. She also outlined the work completed on behalf of MPG in the Proceedings. I do not understand there to be any contest as to the nature of that work, and that is not surprising where similar work was plainly undertaken by the Cosette Parties’ then solicitors in the conduct of proceedings that went to hearing in circumstances of extreme urgency. Ms Whitby also set out the costs incurred by MPG in respect of the Proceedings and the basis on which a gross sum costs order was sought. There is no contest between the parties as to the fact that a gross sum costs order is properly made in the Proceedings, although there is an issue as to its quantum which I address below.

19. MPG also tendered the report dated 24 February 2026 of Ms Morson, a costs consultant. It was common ground that Ms Morson was adequately qualified to provide that report. Ms Morson based her view as to the amount of costs that would properly be recoverable by MPG on a gross sum basis on her experience in costs assessments, although she rightly recognised that the Court’s role in dealing with a gross sum costs application was different from the approach which would be adopted by a costs assessor.

20. Ms Morson there referred to the principles which would be applied by a costs assessor to determine party/party costs, by reference to the factors set out in s 172 of the Legal Profession Uniform Law 2015 (NSW) (“LPUL”), which draw attention to whether the costs incurred are “fair and reasonable in all the circumstances” and are proportionately and reasonably incurred and proportionate and reasonable in amount. They also draw attention to questions as to the skill, experience, specialisation and seniority of the lawyers concerned; the level of complexity, novelty or difficulty of the issues involved and the extent to which the matter involved a matter of public interest; the labour and responsibility involved; and matters including the urgency of the matter, the time spent on it, and the number and importance of documents involved; and the quality of the work done. Ms Morson also referred to the criteria set out in s 76 of the Legal Profession Uniform Law Application Act 2014 (NSW).

21. I do not understand there to be any contest as to the fact that, and the Primary Judgment amply demonstrates that, the solicitors (and Counsel) involved for both parties in the Proceedings had the highest level of skill and experience, with significant specialist skills in complex corporations matters; the issues involved in the Proceedings were novel and of considerable difficulty; and the issues raised were matters of significant public interest, including issues as to the certainty of major commercial transactions implemented by a scheme of arrangement. It was plain that the Proceedings involved significant levels of labour and responsibility for solicitors (and Counsel) for both parties, particularly where they were conducted in circumstances of extreme urgency. The work done by the solicitors (and Counsel) for both parties was of high quality, as the issues reviewed in my Primary Judgment also demonstrate.

22. MPG also tendered invoices issued by its solicitors, which have been available for review by both costs assessors.

23. The Cosette Parties in turn read the affidavit dated 24 April 2026 of Mr Catchpoole, a partner in the firm of solicitors who previously acted for the Cosette Parties in the Proceedings, which addressed particular aspects of the conduct of the Proceedings. The Cosette Parties also read an affidavit dated 24 April 2026 of Mr Gray, a solicitor acting for the Cosette Parties in this application, although I do not understand the matters addressed by that affidavit to have been contentious in this application.

24. The Cosette Parties also tendered a report dated 24 April 2026 of Mr Ramsey-Stewart, also an experienced costs assessor, expressing his view as to the costs which would be recoverable in an assessment. Mr Ramsey-Stewart also identified aspects of the statutory regime that are applicable in a costs assessment. He adopted a somewhat complex ten-stage process for a costs assessment, involving successive reductions in costs, although not all of those steps were relevant to these proceedings. Mr Hochroth readily and fairly accepted that he could not identify any case in this Court in which such an approach had been taken in a gross sum costs application. I will seek to address those steps below, to the extent they paralleled Ms Morson’s somewhat simpler approach. For completeness, Mr Ramsey-Stewart also expressed the overall view that MPG’s costs should be reduced by some 32% from actual costs incurred., although nearly all of that reduction reflected his treatment of solicitors’ costs, and referred to his experience that costs are ordinarily reduced by 30–40% in costs assessments in this Court. There is, however, a real difficulty in generalising from costs assessments undertaken in relatively straightforward and short matters, to a case involving the very unusual features of this matter.

25. By a second affidavit dated 11 May 2026 in reply, Ms Whitby addressed matters raised by the affidavits of Mr Catchpoole and Mr Gray and also responded to aspects of Mr Ramsey-Stewart’s report on which the Cosette Parties relied, which I have addressed above. By her second report dated 11 May 2026 in reply, Ms Morson responded to Mr Ramsey-Stewart’s report and addressed several specific questions in respect of that report. She there identified a modest additional exclusion of $2,176.00 in respect of costs that had been inadvertently included in invoices issued by MPG’s solicitors, which she treated as additional “out-of-scope” reductions to those addressed in her first report. She also addressed matters relating to costs of the costs application and took issue, as a factual matter, with Mr Ramsey-Stewart’s evidence of what cost assessors would do in respect of particular matters. It is largely not necessary to address that question, as a matter of fact, where I can properly proceed on the basis that any costs assessor would act rationally and reasonably, with proper regard to the nature of the Proceedings and the statutory requirements of the LPUL to which I have referred above.

Actual and out of scope costs

26. Ms Morson first determined the actual costs incurred by MPG, and then identified certain "out-of-scope” costs, which primarily arose because MPG’s solicitors had billed MPG for the costs of an application as to which no order for costs had been made as between the parties. The first step in Mr Ramsey-Stewart’s approach was to assess costs for consistency with the costs indemnity principle, which corresponded to the review undertaken by Ms Morson who identified the costs actually incurred. The second step in Mr Ramsey-Stewart’s approach was to extract costs outside the scope of the costs order, which corresponded with Ms Morson’s identification of out-of-scope costs. There was no controversy as to these matters.

Solicitors’ professional costs

27. In summary, by her first report, Ms Morson noted that the actual solicitor costs incurred by MPG included professional fees of $9,634,962.00, which she reduced by $1,565,486.31, about 16.25%, for a recoverable amount of $8,069,475.69. This recoverable amount was subsequently revised, in Ms Morson’s second report as I have noted above, to $8,067,831.04. Mr Ramsey-Stewart expressed the view that professional fees that should be allowed to MPG should be significantly less than those identified by Ms Morson, in the amount of $5,119,055.31, by the application of several steps in his analysis.

28. Ms Morson first concluded, and there is no controversy, that the hourly rates charged by MPG’s solicitors accorded with rates disclosed in the relevant costs agreement. Ms Morson then assessed whether those hourly rates were reasonable by reference to s 172 of the LPUL and guidelines issued by the Costs Assessment Rules Committee (“CARC”), which provide guidance to costs assessors as to hourly rates. The third step in Mr Ramsey-Stewart’s approach was similarly to adjust solicitors’ hourly rates pursuant to the CARC Guidelines.

29. The experts differed as to the hourly rate that should be allowed in respect of Ms Platford, a senior partner in the firm acting for MPG in the Proceedings. Ms Morson noted that the hourly rate charged by Ms Platford was above that provided for by the CARC Guidelines, although, in her experience, below market rates for a senior partner at a top tier firm. Ms Morson expressed the view that the hourly rate charged by Ms Platford was fair, reasonable and proportionate and would be allowed by an assessor as charged, given the nature of the matter. Mr Ramsey-Stewart, oddly, expressed his agreement with a reduction by Ms Morson of the hourly rates applicable to Ms Platford, which Ms Morson had not made; and he did not identify any other substantive basis on which Ms Platford’s costs should be reduced. I prefer Ms Morson’s evidence in this regard, where it is the only reasoned analysis of this matter and it seems to me that a costs assessor would accept Ms Platford’s hourly rate for the reasons that Ms Morson noted.

30. The experts also differed as to the hourly rates that should be allowed in respect of solicitors acting for MPG other than Ms Platford. Ms Morson reduced the hourly rates charged by the solicitors acting for MPG to the maximum hourly rate allowed pursuant to the relevant CARC Guidelines. It seems to me that a costs assessor would likely have allowed hourly rates for solicitors other than Ms Platford at the maximum contemplated by the CARC Guidelines, given the complexity and significance of the issues in the Proceedings and the urgency with which they were conducted, and I accept Ms Morson’s evidence in that respect.

31. By contrast, Mr Ramsey-Stewart extended the same reduction of hourly rates which he applied to Ms Platford to other solicitors acting for MPG, rather than reducing their rates by reference to the CARC Guidelines. Mr Ramsey-Stewart expressed the view that he would ordinarily see hourly rate reductions of approximately 10–15% on costs assessments in respect of solicitors’ costs and appears to assume such a reduction should be applied in this matter because he would ordinarily see it in other matters. I do not accept that proposition, which does not involve either an assessment of the hourly rates of the relevant solicitors on their merits, or have adequate regard to the circumstances of this matter.

32. Mr Ramsey-Stewart also expressed the view that, in his assessment, a costs assessor will generally apply a similar percentage rate of reduction in all solicitors’ fees in a costs assessment application, and he treated that proposition as having the consequence that any reduction of the hourly rate applied to Ms Platford should also be applied to other solicitors. I also do not accept that reasoning. First, Mr Ramsey-Stewart has not established any basis on which Ms Platford’s hourly rate should be reduced, as distinct from wrongly assuming that Ms Morson had done so. Second, it seems to me to be irrational to proceed on the basis that, because one solicitor’s rate should be reduced, all other solicitors’ rates should be reduced by the same percentage, even if those other solicitors’ rates are reasonable. That approach would have absurd results where, for example, a partner’s rate was reduced because it was above the rate that would ordinarily be allowed on an assessment, and a junior solicitor’s rate is then reduced by the same percentage, although it was, before that reduction, already below the rate that would ordinarily be allowed on an assessment. Ms Morson’s evidence is that costs assessors do not ordinarily proceed in that irrational manner. Whether or not Ms Morson is correct in that regard, the Court should not take that irrational approach in a gross sum costs assessment.

33. Ms Morson also made several reductions on a global basis, which she described as “fair and reasonable reductions”. Ms Morson noted that, in the costs assessment process, there are areas of work or costs which are typically reduced or excluded, where the cost of that work is not considered to be fair and reasonable; and she identified several categories of costs that would typically be disallowed on that basis. Ms Morson noted that solicitors’ fees, in her experience, were usually reduced by a total of approximately 10–40%. Ms Morson expressed the view, by reference to her experience, that after adjustment of hourly rates and the exclusion of out-of-scope costs, further reductions applied to professional fees would ordinarily be in the range of 7.5–15%.

34. Ms Morson expressed the view that, in this case, a costs assessor would likely allow the costs of internal conferences, referable to the management of the matter, although those costs might well not be allowed in a less complex case. It seems to me that it would be perverse for a costs assessor to exclude the costs of internal management, which was essential in a case involving extreme complexity and urgency so as to promote the just, quick and cheap resolution of the real issues in dispute in the Proceedings, and I accept Ms Morson’s approach to internal conferences on that basis. Ms Morson also referred to the process of legal information and document review, and expressed the view that those costs would also likely be allowed by a costs assessor subject to only a small reduction. I also accept that view, where those costs were plainly essential in a matter where the parties were addressing voluminous documents relating both to the transaction and to MPG’s underlying business.

35. Ms Morson also recognised that some of the time entries recorded by MPG’s solicitors were “bulk entries” involving multiple tasks and comprising several hours of work, although she indicated that her review did not suggest that the time claimed was in excess of an amount that would be allowed as fair and reasonable on assessment. I will find below that a modest additional discount to solicitors’ fees should be allowed, to recognise the possibility that those entries would have been closely reviewed and some of them may have been disallowed in a costs assessment.

36. At this point, Mr Ramsey-Stewart took a two-stage approach, involving cumulative reductions. The fourth step in his approach was to reduce solicitor/client costs that “would not be drawn in any costs itemisation”. He there noted that some costs would be excluded when preparing a costs itemisation for the purposes of a costs assessment; he suggested a reduction of 5–10% of the costs remaining after his second and third steps would generally allow for such exclusions; he then undertook a review of two tax invoices issued by MPG’s solicitors to conclude that 12% of solicitors’ costs should be excluded on that basis; and then generalised that conclusion to other invoices that he had not reviewed. There are two difficulties with this approach. First, I do not accept that a reduction of 5–10% of the costs seen in other matters, likely of a different scale and character, warrants such a reduction here. Second, Mr Ramsey-Stewart’s review of those invoices was plainly erroneous in significant respects, where he had misunderstood matters addressed in the invoices as relating to administrative steps, rather than substantive disputed issues in the Proceedings. I can give no weight to that review, still less to his approach of generalising that erroneous review and applying it to other invoices which he has not reviewed.

37. The fifth step in Mr Ramsey-Stewart’s approach was to apply a further percentage reduction for costs that would occur on any assessment of ordinary costs, which he described as the “costs assessor reduction”. He described this step as relating to the reduction that would be made by a costs assessor once a costs itemisation had been drawn for the purposes of that assessment. Mr Ramsey-Stewart expressed the view that costs would here ordinarily be reduced by 20–30% of ordinary costs on a costs assessment, and that he had “generally found” that the reduction would be less for a smaller legal team than for a larger team and, in effect, that there is a greater risk of duplication and excessive time claims in respect of a larger team. I do not accept that either aspect of that approach assists in the determination of this application. First, there is no rational basis on which to assume that, because there is generally a reduction in the assessment process of 20–30%, then costs in every matter would be reduced by 20–30%, irrespective of the relevant factual circumstances or the nature of the costs incurred. That proposition substitutes asserted general experience, presumably across a range of matters of different kinds, for any merits-based analysis of the actual costs incurred in these Proceedings. Second, while it may be that it is generally the case that there is more prospect of duplication in a larger team than a smaller team, it does not follow that duplication should be assumed in this matter, without any or any adequate assessment of whether it has occurred.

38. At this step of his analysis, Mr Ramsey-Stewart reviewed a single, although substantial, invoice issued by MPG’s solicitors and concluded that 31% of the costs detail would be reduced in a costs assessment. Mr Ramsey-Stewart’s explanation of that conclusion, in Appendix 3 to his report, is vague and general, suggesting that the items that would be excluded:

“have some, or all, of the following deficiencies: Insufficient detail, excessive time claimed, bulk itemisation, duplication and potentially ineffective delegation.”

However, the difficulty with that proposition is that Mr Ramsey-Stewart does not explain the basis on which he has reached that view. So far as the evidence goes, he has made no or no adequate assessment whether the time claimed for work done by MPG’s solicitors was excessive; and he identifies no particular case of duplication or potentially ineffective delegation. Instead, Mr Ramsey-Stewart merely circled particular attendances in the invoice that he reviewed which, for reasons which he does not explain, he regards as falling in one or other of those categories. I do not regard that approach as providing any rational basis for the 31% deduction which Mr Ramsey-Stewart identifies, still less for generalising that deduction to other invoices which Mr Ramsey-Stewart has not reviewed.

Counsel fees

39. Ms Morson also noted that the actual costs incurred by MPG included Counsel fees of $2,970,177.59, which she reduced by $410,573.50, about 13.82%, for a recoverable amount of $2,559,604.09. Mr Ramsey-Stewart’s sixth step involved the reduction of Counsel fees and Mr Ramsey-Stewart agreed with Ms Morson’s reduction of Counsel fees. Where this amount was common ground between the experts and the parties, I will proceed on that basis, although the Courts often do not reduce Counsel fees in gross sum costs applications.

Expert and consultant fees

40. Ms Morson identified expert and consultant fees incurred by MPG of $2,216,299.53, to which she applied no reduction. Ms Morson identified the experts retained by MPG and referred to the amount of their fees. Her evidence was that, in her experience, fees of experts and consultants were ordinarily allowed in full on an assessment.

41. By contrast, Mr Ramsey-Stewart’s seventh step involved a reduction in expert and consultant fees, and he expressed the view that expert and consultant fees should be reduced to $2,050,077.10, a lesser amount than identified by Ms Morson. Mr Ramsey-Stewart there expressed the view that expert and consultant fees would not be reduced as significantly as solicitors’ fees or Counsel fees, and that there are some circumstances where such fees are not reduced at all. He nonetheless observed that, generally, such fees are reduced by a range of 5–10% and applied a reduction of 7.5% in this matter for that reason. It seems to me that that approach, first, fails to address the question whether there is any proper basis on which to reduce the fees of the particular experts in this manner and, second, is plainly inconsistent with Mr Ramsey-Stewart’s own evidence that there are some cases where expert and consultant fees are not reduced. I would not accept a general reduction of that kind, where Mr Ramsey-Stewart identifies no aspect of this matter that would support it.

42. I accept Ms Morson’s view as to this matter, where MPG had retained experts in specialist fields in the Proceedings and the evidence led by the Cosette Parties does not raise any suggestion that those experts have overcharged for their work.

Disbursements

43. Ms Morson identified other disbursements of $830,517.93 incurred by MPG, to which she identified a reduction of $1,533.00, about 0.18%, to reach a result of $828,984.93. Apart from that reduction, she again expressed the view that those disbursements would likely have been allowed in full on an assessment. Mr Ramsey-Stewart’s eighth step involved a reduction in general disbursements, and he expressed the view that disbursements should be reduced to $809,755.00, also a lesser amount than that identified by Ms Morson.

44. Mr Ramsey-Stewart there expressed the view that “general disbursements, if proof of payment can be provided, are generally allowed in full on an assessment”. He nonetheless observed that there are circumstances where disbursements are reduced on taxation and applied a reduction of 2.5% to general disbursements, on the basis that a maximum reduction of 5% on general disbursements is generally seen in an assessment. Mr Ramsey-Stewart identified no basis on which that reduction should be applied here and undertook no scrutiny of particular disbursements to suggest that it was warranted. I do not accept that approach.

Submissions and determination

45. With this background, I will address the parties' wider submissions and reach findings as to the particular categories of costs and disbursements claimed by MPG.

46. Mr O’Brien, with whom Mr Gerber appeared for MPG, pointed to the nature of the Proceedings in uncontroversial terms and also pointed to the difference between the costs now claimed by MPG, now $13,672,719.59 plus interest and the costs of the application, and the Cosette Parties’ contention that lesser costs of $10,538,491.50 be allowed. Mr O’Brien rightly noted the scale and expedition of the Proceedings and the volume of the work that was required to be done within an extremely tight timetable. He rightly also noted that the urgency of the Proceedings was the consequence of the Cosette Parties’ refusal to extend the “end date” for the transaction which was in issue, although it is sufficient for the purposes of this application to recognise that the Proceedings needed to be and were determined on an urgent basis.

47. Mr O’Brien rightly recognised that the primary differences between the experts related to the substantially lower amount of professional fees as quantified by Mr Ramsey-Stewart, by contrast with Ms Morson, and the percentage deduction of 7.5% made by Mr Ramsey-Stewart to expert fees and 2.5% made by Mr Ramsey-Stewart as to other disbursements. I address the evidence as to these matters below. Mr O’Brien also addressed the circumstances which warranted a gross sum costs order in this case. I broadly accept his submissions in that respect, but the fact that such an order should be made is in any case common ground between the parties. Mr O’Brien also summarised Ms Morson’s analysis and addressed the more complex approach adopted by Mr Ramsey-Stewart with its multiple steps, which I address below. Mr O’Brien challenged the reduction to Ms Platford’s rates adopted by Mr Ramsey-Stewart; his attempt to extend that reduction to other solicitors’ rates irrespective of the extent to which their rates were consistent with the CARC Guidelines; and his approach to then apply additional reductions for costs that would not be claimed in an assessment and then for costs which would not be allowed in an assessment. Mr O’Brien also challenged Mr Ramsey-Stewart’s approach of applying a reduction of 7.5% to expert costs and 2.5% to disbursements, by reference to Mr Ramsey-Stewart’s suggested common experience in assessments, rather than anything referable to the conduct of the Proceedings.

48. Mr Hochroth in turn recognised that a gross sum costs order is appropriate, but submitted the Court should order some amount of $10,538,491.50, representing a 32.67% reduction of MPG’s actual costs. Mr Hochroth submitted that that percentage reduction is consistent with authorities which indicate that it is usual on a gross sum costs application for costs awarded on the ordinary basis to be reduced in the order of 30% from solicitor/client costs. I do not accept that submission. As I noted above, Courts have been prepared to assume that solicitors will generally recover 70% of solicitor/client costs on such applications, without requiring the need for expert evidence, but the authorities do not establish that that percentage provides a limit to costs recoverable, where expert evidence justifying a higher amount is led. Second, that proposition is inconsistent with the observations of the Court of Appeal in Ahern, which recognised the possibility that a higher percentage of costs may be recoverable on a gross sum basis, where a proper evidentiary basis for that recovery is established.

49. Mr Hochroth also submitted that there is no case comparable to the present proceeding where an unsuccessful party was ordered to pay anything like the 87% of the successful party’s actual costs on a gross sum basis, as claimed by MPG here. I recognise that there is likely no comparable case to these Proceedings, where a case of this scale went to hearing so quickly, at least since the Court’s takeovers jurisdiction was transferred to the Takeovers Panel. I do not accept Mr Hochroth’s further observation as to the quantum of recovery, absent any comprehensive survey of the cases in Mr Hochroth’s submissions. Mr Hochroth also summarised the differences between the views expressed by Ms Morson and Mr Ramsey-Stewart, in terms that are substantially consistent with Mr O’Brien’s summary of those differences. As noted above, Mr Hochroth particularly relied on the decisions in Idoport and Seven Network, and also addressed well-established principles in respect of gross sum costs applications, by reference to the case law which I have reviewed above.

50. The determination of this application is ultimately straightforward once it is recognised that each application of this kind must be determined in its own circumstances, and having regard to the case law and the applicable principles which I have reviewed above and the relevant evidence. In summary, both parties have had access to, and the opportunity to review, invoices issued by MPG’s solicitors to MPG, which were in evidence in the application. I accept Ms Morson’s evidence in respect of the amount of solicitors’ fees that is properly allowed in this application. I have not accepted Mr Ramsey-Stewart’s approach to Ms Platford’s hourly rate, for the reasons noted above, or his extension of the discount that he applied to Ms Platford to the rates of other solicitors. Even if I had been persuaded that Ms Platford’s hourly rate should be reduced, it seems to me that applying that reduction in one solicitor’s rate to all other solicitors, who had different hourly rates, would not be justified. I have noted that Mr Ramsey-Stewart’s partial review of invoices is undermined by significant errors in his understanding of particular attendances, typically involving a failure to recognise the matters that were in issue in the Proceedings. I am not persuaded that Mr Ramsey-Stewart, in his subsequent steps in dealing with solicitors’ costs, established the basis for the two further reductions in solicitors’ professional fees for which he contends, for the reasons noted above.

51. I also recognise that, of its nature, a gross sum costs application involves a less detailed review of invoices than an assessment, although the parties and the experts had a full opportunity to review the invoices issued by MPG’s solicitors to MPG. Notwithstanding the observations of Brereton J in H**ancock, I accept that an additional discount (in the second sense noted above) should be applied to the solicitors’ fees as determined by Ms Morson to reflect the nature of this application and the fact that a full costs assessment has not taken place. That additional discount should be 5%, being less than the lower range of the discounts noted in Ahern, given the detailed expert evidence led in this application which allows a more reliable basis for a gross sum costs application. In the result, the actual professional fees incurred by MPG of $9,634,962.00, which were reduced by Ms Morson to $8,067,831.04 to deal with inter alia, out-of-scope costs, should be further reduced to $7,664,439.49 after applying that additional discount.

52. As I noted above, the experts reached a common position as to Counsel fees, for a total of $2,559,604.09, after applying a discount of 13.82%. I proceed on that basis, although Counsel fees have often been allowed in full in gross sum costs applications. As I have explained above, I do not consider that the discounts applied by Mr Ramsey-Stewart to expert fees and other disbursements, which do not reflect any real analysis of the nature of that expert evidence or the nature of the disbursements in this matter should be accepted, and I will allow them in the amounts of $2,216,299.53 and $828,984.93 respectively.

53. In the result, MPG’s costs should be determined on a gross sum basis in the amount of $13,269,328.04.

Interest on costs

54. I do not understand there to be any contest as to MPG’s entitlement to interest on the costs that are awarded in this application. However, the parties will need to formulate the form of order that should be made as to interest, and possibly calculate the amount of that interest, having regard to this judgment.

Costs of this application

55. Both parties led evidence as to the costs of this application. However, it was common ground that I should defer dealing with that matter where there is a possibility that the parties may be able to agree that question between themselves, and MPG foreshadowed a possibility that an order for costs would be sought on a special basis, although that result may be unlikely given the mixed outcome of the application.

Orders

56. I direct the parties to submit agreed orders to give effect to this judgment, including as to the question of costs, within seven days and, if there is no agreement as to the form of those orders, to submit their respective draft orders and short submissions as to the differences between them, not exceeding five pages in Arial font 12, one and a half spacing, within that period.

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