Lorenzato v Lorenzato & Anor

Supreme Court of NSW|2011-07-15|Before: Black J

Judgment 1In my judgment delivered on 7 July 2011 ([2011] NSWSC 723), I granted the Plaintiff's application to vacate the hearing date for the proceedings which was then listed for five days commencing on 11 July 2011. I ordered that the Plaintiff pay the Defendants' costs thrown away by vacating the hearing and of and incidental to the application to do so, as agreed or as assessed. I also indicated that the Defendants were free to bring an application for an order for costs as a specified gross sum under s 98 of the Civil Procedure Act 2005 (NSW), if so advised. I did not then make an order which was sought by the Defendants that costs be payable forthwith, but indicated that I would allow the parties an opportunity to make submissions as to the authorities dealing with the circumstances in which such an order should be made. 2When the matter was re-listed before me for directions on 15 July, each of the First and Second Defendants pressed applications for gross sum costs orders under s 98 of the Civil Procedure Act and also pressed for orders that the costs determined in that manner be paid forthwith.

Application for lump sum costs order 3Section 98(1) of the Civil Procedure Act provides, relevantly, 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. That power has most commonly been exercised where costs have been incurred in lengthy or complex cases and it is not a power that the Court would routinely exercise in place of the costs assessment process. In the exercise of its discretion, the Court is not required to undertake a detailed examination of the kind which would be undertaken in a costs assessment and will apply a "broad brush" approach: Hadid v Lenfest Communications Inc [2000] FCA 628 at [35]; Harrison v Schipp (2002) 54 NSWLR 738. The power to make a gross sum costs order should only be exercised where the Court considers it can do so fairly between the parties, including achieving an appropriate sum on the materials available to it and the Courts have typically applied a discount in assessing costs on a gross sum basis: Ritchie's Uniform Civil Procedure NSW [s 98.65]; Charlick Trading Pty Ltd v Australian National Railways Commission [2001] FCA 629; Sony Entertainment (Aust) Ltd v Smith (2005) 215 ALR 788; Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23. 4The First Defendant relies on an affidavit of Ms Wajiha Ahmed, who is the solicitor with carriage of the matter for the First Defendant. Ms Ahmed sets out the costs incurred by her office and by Counsel for the First Defendant in respect of the vacation of the hearing date and of and incidental to the application to vacate the hearing date. Those costs largely relate to the costs of the motion to vacate the hearing date before me, but also include a brief on hearing fee payable to Counsel for five days. The Second Defendant relies on an affidavit of Christopher Matthew Zucker, who is the solicitor with carriage of the matter for the Second Defendant. The costs sought by the Second Defendant relate to the costs associated with the application to vacate the hearing date. 5Each of the First and Second Defendants seek a gross sum costs order in the total amount of the costs incurred by vacating the hearing and of and incidental to the application to do so. It would not be appropriate for me to make a gross sum costs order on that basis, which would be equivalent to, and possibly more generous than, an order for costs on an indemnity basis. I did not make an order for costs on an indemnity basis in my judgment delivered on 7 July 2011. 6The material before me is not sufficient for me to make a gross sum costs order on any other basis, since it does not include any evidence of a costs assessor and provides no basis for me to assess the amount which would be likely to be recoverable on assessment as distinct from the level of costs actually incurred: cf Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2011] NSWSC 11. Since the evidence does not provide a basis for me properly to determine the amount of a gross sum costs order, it is not possible for me to make one and I do not need to determine whether it would have otherwise been a proper exercise of discretion to do so.

Whether costs should be paid forthwith 7The Defendants also sought an order that the costs which are payable by the Plaintiff to the Defendants be paid forthwith. Rule 42.7 UCPR provides that, unless the Court otherwise orders, the costs of any application or other step in proceedings are to be paid or otherwise dealt with in the same way as the general costs of the proceedings, and do not become payable until the conclusion of the proceedings. The case law indicates several circumstances in which an order permitting earlier enforcement of a costs order relating to an interlocutory application can be made, including where the interlocutory proceedings relate to matters distinct from the substantive issues in the proceedings; where the costs have been incurred as a result of unreasonable conduct by the party against whom the order has been made; and where the costs are significant and the time for payment may otherwise be long postponed because of the state of the proceedings: Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1. 8Counsel for the Plaintiff fairly concedes that the application for vacation of the hearing date related to matters distinct from the substantive issues in the proceedings and that it would be difficult to contest the proposition that there had been unreasonable conduct on its part. I have referred to the absence of the evidence necessary for the Plaintiff to proceed with the hearing and to the late retainer of Counsel in my earlier judgment in these proceedings. On the other hand, Counsel for the Plaintiff notes that it is hoped that this matter will still be able to proceed to a hearing this year, so that the payment of costs may ultimately not be long deferred. 9Counsel for the First Defendant (whose submissions were largely adopted by the Second Defendant) draws my attention to several cases in which the Courts have been prepared to make orders that costs be paid forthwith in circumstances where hearings have been vacated shortly before the hearing date, by reason of the inability of one party to proceed: for example, Nine Films & Television Pty Ltd v Ninox Television Ltd [2005] FCA 357; Fujian Holdings Pty Ltd v Rockman (Australia) Pty Ltd [2005] FCA 340; Abacus Property Developments Pty Ltd v Cynthia Jian Er Huang [2007] NSWSC 47. Counsel also fairly drew my attention to the decision in Crump v Equine Nutrition Systems Pty Ltd t/as Horsepower [2004] NSWSC 1080 where Bergin J declined to make orders that costs be paid forthwith, in circumstances that her Honour had ordered the payment of costs thrown away on an indemnity basis, but rightly pointed out that I did not make an order for indemnity costs in my judgment delivered on 7 July 2011. 10Counsel for the First Defendant also pointed out that the amount involved in the orders for costs which are sought is not such that it is likely to stultify the conduct of the proceedings, having regard to the fact that the Plaintiff is proceeding to a five day hearing in which she will incur the costs of her own legal advisers and will necessarily have an exposure to the costs of the other parties to the proceedings if she is unsuccessful. I do not understand the Plaintiff's Counsel to contend to the contrary. 11Having regard to the circumstances in which the hearing was vacated, as set out in my earlier judgment, I consider it appropriate to order that the costs payable by the Plaintiff to the Defendants, as set out in my earlier judgment, be paid forthwith as agreed or as assessed.

A further application by the Plaintiff 12When the matter was listed before me, on 15 July 2011, I granted leave to the Plaintiff to file any written submissions and affidavit in respect of the Defendants' application for a gross sum costs order and for an order that the costs of the amendment be paid forthwith. The Plaintiff delivered to my Chambers a Notice of Motion seeking an order, inter alia, that such costs as are ordered to be paid by the Plaintiff arising from the vacation of the hearing of the proceedings be paid by the Plaintiff's former solicitor and with an affidavit in support of that Motion. The Plaintiff's submissions contended that she relied upon the advice and services of her former solicitor in the preparation of the case which was listed for hearing on 11 July 2011 and also submitted that costs should be assessed in the usual manner. 13I do not consider it appropriate to defer a determination as to the Defendants' entitlement to the costs thrown away in order to address the Motion. As I noted in my judgment dated 7 July, it is unlikely that that Motion could be determined without a waiver of legal professional privilege over correspondence between the Plaintiff and her former solicitor, particularly where the solicitor's evidence was that her instructions to brief Counsel were not complete until a little more than a week before the hearing commenced. 14If the Plaintiff seeks to pursue the Motion before me, so as to obtain an order that the solicitor indemnify her against the costs which I have ordered she pay, then her solicitors should approach my Associate with a range of dates which are convenient to her and her former solicitor for argument as to that matter.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 27 July 2011

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