Michael Wilson & Partners v Emmott

Application and evidence in support

1. By the notice of motion dated 22 November 2024 but filed on 25 November 2024, the respondent seeks an order pursuant to s 98(4) of the Civil Procedure Act 2005 (NSW) in the following terms: 1. An order pursuant to s.98(4) Civil Procedure Act (NSW), 2005 that the applicant pay the respondent's costs, instead of assessed costs, in the specified gross sum of $9,131.05, together with the costs of this application in the sum of $1,690.00 and the filing fee for the notice motion of $748.00, making a total of $11,569.05, or such other amount as this Honourable Court may determine.
2. In his affidavit sworn 20 November 2024, Mr Duggan has deposed that his experience as a solicitor of this Court, in more than 43 years of practice in complex commercial litigation, has included acting for parties both at trial and on appeal in superior courts including the Supreme Court of New South Wales, the Federal Court of Australia and the High Court of Australia, and that he has often acted for and advised parties in costs assessments (see at [3]-[5] of his affidavit).
3. Mr Duggan has deposed (at [9]) that he was first instructed to act for the respondent in these proceedings on or about 1 November 2024; and (at [10]) has listed the work performed by him ([11]) for his firm (Duggan Legal) in the proceedings. Mr Duggan has further deposed that his hourly rate is $545.00 exclusive of GST (noting that because the respondent resides outside Australia, GST is not payable on the fees charged to him) ([12]). Mr Duggan has exhibited a tax invoice dated 15 November 2024 issued to the respondent in respect of the costs incurred in these proceedings. The amount invoiced totals $2,834.00 for Duggan Legal's professional fees in relation to these proceedings.
4. Mr Duggan has also exhibited to his affidavit his costs disclosure and costs agreement dated 19 July 2022, as well as a copy of the Guidelines of the New South Wales Costs Assessment Rules Committee (CARC Guidelines) dated 24 October 2023 as to costs payable between parties under court orders. By reference to the CARC Guidelines, Mr Duggan has deposed that the hourly rate charged in the Duggan Legal tax invoice is within and near the bottom of the range for senior partners/partners/specialists (10+ years) set out in the CARC Guidelines ([15]).
5. As to Counsel fees and disbursements, the respondent claims total fees (GST inclusive) of $6,250 together with disbursements of $47.05 (for photocopies), as itemised in a tax invoice dated 15 November 2024 issued by the respondent's Counsel, Mr John Baird. A copy of Mr Baird's conditional costs agreement with Duggan Legal is also exhibited to Mr Duggan's affidavit.
6. Mr Duggan has deposed that the daily rate of $5,000 charged by Mr Baird is within the CARC Guidelines and Mr Baird's hourly rate of $600.00 is slightly in excess of the CARC Guidelines but that Mr Baird is an experienced practitioner with 30 years' experience as a solicitor prior to his 16 years' as a barrister ([20]).
7. Mr Duggan has deposed that, in his experience, the amount of (solicitor's) costs on a party and party assessment of costs is usually reduced (between 15% and 30%) from the amount which would be allowed between solicitor and client ([18]) and that the reduction is usually at the lower end of the scale where the hourly rates of the practitioners are within and near the bottom of the ranges set out in the CARC Guidelines ([18]).
8. Mr Duggan has further deposed that, in his experience, on a party and party assessment of costs, counsel's fees are allowed in full if they are within or not greatly above the range set out in the CARC Guidelines ([22]).
9. Mr Duggan has calculated the respondent's total claim for solicitor's costs, Counsel's fees and disbursements at $9,131.05. The respondent also claims the costs of preparing the gross sum costs application as a gross sum of $1,690.00, representing one hour of Counsel's time and two hours of solicitor's time at the above rates ([28]).
10. Mr Duggan has also deposed to his awareness that in recent decisions in the Supreme Court of New South Wales on applications for gross sum orders, a further discount in the range of 10% to 15% has sometimes been allowed on the amount of party and party costs claimed on the ordinary basis.
11. As noted above, in his notice of motion the respondent also claims the sum of $748.00, being the filing fee for the notice of motion.
12. Mr Duggan has calculated a range of outcomes, depending on whether a 15%, 20% or 30% reduction to solicitor's fees is applied, with no discount to counsel's fees ([23]-[26]), but this does not take into account either the costs of the gross sum costs application or the filing fee.

Respondent (Mr Emmott)

1. The respondent submits that this is an appropriate case in which to make a gross sum costs order (in such sum as the Court considers appropriate) and that the Court has sufficient information before it, in order fairly to make such an order. The respondent says that the amount claimed is relatively small (now totalling $11,569.05 as set out above) and that its constituent elements are substantially within CARC Guidelines.
2. The respondent submits that the costs of assessment are likely to be disproportionate to the amount in issue and that there is likely to be delay in finalising any assessment, having regard to the applicant's conduct to date of the proceedings both in this Court and at first instance in this matter. In that regard, the respondent says that: the Summons Seeking Leave to Appeal was filed late without proper explanation; the White Folder was not prepared expeditiously and contained vast quantities of irrelevant, prolix material; and that an expedited hearing of the application had to be arranged, as the hearing the subject of the application to vacate was due to commence on the Monday immediately following the hearing in this Court.

Applicant's position

1. On 4 December 2024, the applicant filed and served an affidavit of Mr Michael Wilson (headed the "2nd Affidavit of M.E. Wilson of 03.12.24"), in which Mr Wilson deposes to the applicant's opposition to the special costs order sought and to that issue being dealt with on the papers only ([7.5]). Pausing here, it was indicated at the time the directions were made for submissions in relation to the special costs order that these would be considered on the papers. We see no need for further costs to be incurred in an oral hearing on the application.
2. Mr Wilson has deposed that the respondent (Mr Emmott) is a "judgment debtor and debtor" of the applicant "in all jurisdictions" and has been so since 3 December 2018 to date in "very large and significant sums" ([7.6]). Mr Wilson also deposes that: 7.7 in light of the fact that as a matter of contract and law all monies howsoever payable, accruing or accrued due to the Respondent in all and any proceedings anywhere in the world effectively belong to and have to be paid to MWP qua Sinclair, and cannot be received, used or enjoyed by the Respondent himself and/or shared with and/or paid to anyone else, including his current contingent lawyers Messrs Duggan and Baird, which important facts have been concealed, withheld and not disclosed by the Respondent to this Court, in material breach of duty as they should have been.
3. A similar contention is made in the initial outline of submissions dated 4 December 2024 at [5].
4. Mr Wilson's affidavit (from [8]) then deposes to the contention that the respondent is a judgment debtor of the applicant and is owed no moneys by the applicant, "has nothing left, and has no purported or actual right of setoff… all costs disallowed". In this section of the affidavit, Mr Wilson cavils with the reasons of Hammerschlag CJ in Eq in his Honour's judgment following the hearing commencing on 18 November 2024 (Michael Wilson & Partners Ltd as the assignee of Robert Colin Nicholls & Temujin International Limited (as trustee of Temujin International (trading) Trust) & Temujin Services Limited v Emmott [2024] NSWSC 1489).
5. From [15], Mr Wilson deposes to matters that he contends mean that all moneys have to be paid to the applicant (MWP). From [21], Mr Wilson (in effect by way of submission) deposes to his conclusion as to the matters asserted at [7.7] of his affidavit (see above).
6. In further submissions filed 12 December 2024, the applicant asserts that the respondent has never had any of his alleged costs assessed, taxed and certified anywhere in the world (which the applicant says "speaks volumes" as to the true position), and it refers to an EWHC judgment (see at [3] of its 12 December 2024 submissions).
7. The applicant claims that the respondent is in breach of certain undertakings in relation to the assessment of costs in proceedings in the UK.
8. The applicant further claims that the respondent's legal practitioners are acting contrary to s 183 of the Legal Profession Uniform Law (NSW), which prohibits contingency fees. Complaint is made that from 2016 to date, no receipted fee notes or proofs of any payments ever having been made by the respondent to Messrs Duggan and Baird exist (see at [4] of its 12 December 2024 submissions).
9. On that basis, the applicant asserts that all and any alleged and purported costs of the respondent must be tested, investigated, taxed, assessed and certified in the usual way, with all back-up and supporting documentation being provided "as the veracity of the same cannot be trusted and relied upon, as the record shows and proves".
10. Again, it is asserted that, by reference to deeds exhibited to Mr Wilson's affidavit (which from the index comprise various deeds and other documents relating to the substantive disputes between the parties), no moneys can be required to be paid to the respondent or his lawyers, instead all moneys must be paid to the applicant itself "qua Sinclair", (having regard to the EWHC's decision in the UK by HHJ Pelling KC, as upheld by Popplewell LJ in the EWCA in 2022).
11. In response to the respondent's submissions, the applicant contends that the solicitor's hourly rates "are clearly excessive", as also are the total amounts claimed; that the summons was not filed late and that the White Folder was expeditiously filed and did not contain irrelevant material.
12. The applicant points out that in the orders of 15 November 2024 no costs were awarded by this Court as to the expedition motion dated 7 November 2024 and complains that the claimed costs fail to exclude costs relating to the expedition motion.
13. Complaint is made as to the authenticity and validity of the costs agreement exhibited to Mr Duggan's affidavit. The applicant contends that all of the originals of the costs agreement "with wet-ink signatures" need to be produced for inspection and, similarly, the original signed invoice needs to be produced for inspection.
14. Complaint is made that the "purported" costs agreement relates to the proceedings at first instance (not the appeal) and that counsel's costs letter includes reference to the (failed) special leave application to the High Court (where MWP obtained a favourable costs order) and a security for costs application at first instance.
15. The applicant contends that there is no proper basis for a special (i.e., gross sum) costs order in the present circumstances. It submitted that costs can be assessed, taxed and certified in the usual way and following due process as the appeal in question is concluded.
16. That said, the applicant says that if a special costs order is considered appropriate, then since the costs are on the ordinary basis, it would be appropriate to apply at least a 35% discount to the total claimed fees (for both the hearing and the costs submissions, of both Counsel and solicitors), and the applicant says that for a lump sum assessment, it would be appropriate to apply a 20-25% further discount (suggesting a mid-point figure of 22.5%).

Determination

1. The principles relevant to the making of a gross sum costs order were set out in Hamod v State of New South Wales [2011] NSWCA 375 (Hamod) by Beazley JA (as Her Excellency then was) (at [813]ff), and have been referred to in numerous cases since then - see for example, Penson v Titan National Pty Ltd (No 3) [2015] NSWCA 121 at [5]-[7] per Campbell AJA and Gabrielle v Abood (No 4) [2023] NSWCA 100, where the Court (Bell CJ, Kirk and Adamson JJA) said at [6]: The power to make a gross sum costs order provided by s 98(4)(c) of the Civil Procedure Act 2005 (NSW) is discretionary. Authority establishes that the discretion is not confined and may be exercised whenever the circumstances warrant its exercise; it should only be exercised when the Court considers that it can do so fairly between the parties, and that includes having sufficient confidence in arriving at an appropriate sum on the materials available; courts have typically applied a discount in assessing costs on a gross sum basis; and the court is not required to undertake a detailed examination of the kind that would be appropriate to taxation or formal costs assessment: see Hamod v New South Wales [2011] NSWCA 375 at [813]-[820] and authority there cited.
2. The considerations material to the exercise of the discretion to make such an order principally include: the complexity of the proceedings in relation to their cost; whether the assessment of costs would be "protracted and expensive"; whether there is a risk that the unsuccessful party would not be able to meet a liability of the order likely to result from the assessment; and the relative responsibility of the parties for the costs incurred, especially where the costs incurred are disproportionate to the result of the proceedings.
3. Giles JA in Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 said (at [22]) that: 22 … The approach taken to estimate costs must be logical, fair and reasonable (Beach Petroleum NL v Johnson [(1995) 57 FCR 119; [1995] FCA 350] at 123; Hadid v Lenfest Communications Inc [[2000] FCA 628] at [27]). The power should only be exercised when the Court considers that it can do so fairly between the parties, and that includes sufficient confidence in arriving at an appropriate sum on the materials available (Wentworth v Wentworth (CA, 21 February 1996, unreported, per Clarke JA)).
4. The purpose of a gross sum costs order is to avoid the expense, delay, and aggravation involved in protracted litigation arising out of assessment (Hamod at [817]; Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 at [9] per Einstein J; Beach Petroleum NL v Johnson (1995) 57 FCR 119, at 120; [1995] FCA 350 per von Doussa J).
5. Having regard to that purpose, and where it is recognised that the procedure is appropriate where costs have been incurred in lengthy or complex cases and there is likely to be a disproportion between the costs incurred and the costs of the assessment process, in our opinion this is clearly a case in which such an order is warranted. The stance taken by the applicant on the present application (including the complaints made as to the non-production of original copies of the costs agreement, receipts, tax invoices and proofs of payments) leaves little doubt that a costs assessment process is likely to be protracted and costly. The likely cost and delay of such a process is disproportionate to the amount now claimed.
6. The Court must of course be satisfied that any gross sum costs order is made on the basis of a logical, fair and reasonable estimate of costs and the onus in that regard is on the party seeking the gross sum costs order. The evidence of Mr Duggan provides such a basis. While complaint is made by the applicant that the gross hourly fees are excessive (which does not appear to us to be so on the face of the estimates), and that the estimates do not exclude amounts referable to other aspects of the proceedings, this can be met by applying a discount to the overall sum claimed. As to the complaint that the costs invoices do not separate out costs of the expedition application, it should be noted that the hearing of the leave application was expedited having regard to the imminent hearing before his Honour. The application for expedition therefore was warranted.
7. As to the applicant's dispute in relation to whether the summons was filed late, or the White Folder contained irrelevant material, it is not necessary to descend into the minutiae of those contentions.
8. In the present case, as adverted to above, the evidence as to the costs incurred by the respondent is more than sufficient to enable an assessment of a gross sums costs order to be made. This is appropriate where the amount sought is relatively small and the costs of assessment are likely to be disproportionate to the amount that may reasonably be in issue on assessment. The Court on a gross sum costs application does not apply a process similar to a taxation of costs, but adopts a much broader brush. A discount is ordinarily warranted to reflect the contingencies ordinarily inherent in the assessment process. That said, one must be astute to avoid both overstating the recoverable costs and underestimating the appropriate amount by applying some arbitrary discount to the amounts claimed.
9. In all the circumstances it is appropriate in our opinion to fix the gross sum costs order by: (1) allowing 85% of the solicitor's costs, including in respect of the costs of the preparation of this gross sum costs application (being a conservative discount of 15% rather than the 35% that the applicant suggests); (2) allowing the whole of Counsel's fees and disbursements (which are not on their face excessive), including in respect of the costs of the preparation of this gross sum costs application; (3) applying a further discount of 10% to the sum of the solicitor's and Counsel's costs so calculated, to take into account contingencies inherent in the taxation process and the complaints made by the applicant as to the components included in the costs claimed; and (4) adding to that figure the filing fee for this application (in full).
10. Such an order will avoid the expense, delay and aggravation that may reasonably be anticipated to arise out of a costs assessment. The submissions by Mr Wilson (in his affidavit and in the applicant's written submissions) as to the effect of the UK decisions referred to go to matters of enforcement, not to the fixing of a lump sum assessment on a particular application.
11. This amounts to $3,335.40 for the solicitor's costs (inclusive of that proportion of the solicitor's costs in the making of this application, being $1,090 of the total cost of $1,690), $6,897.05 in respect of Counsel's fees and disbursements (including $600 of Counsel's fees on this application), less the 10% discount to the sum of both fees as calculated (which amounts to $9,209.21) plus the cost of the filing fee in full ($748), arriving at a total of $9,957.21. A gross sum costs order will be made in that amount.

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: 20 December 2024