Mitchell v Roads and Maritime Services

Mitchell v Roads and Maritime Services - [2024] NSWSC 1593 - NSWSC 2024 case summary — Zoe

[3]

INTRODUCTION

This judgment concerns the issue of costs arising from the judgment I delivered in Mitchell v Roads and Maritime Services (now known as Transport for NSW) (No 2) [2024] NSWSC 1165 (Principal Judgment). This judgment assumes familiarity with, and adopts the shorthand expressions and defined terms used in, the Principal Judgment.
These representative proceedings were brought by the lead plaintiffs, Darren and Rosaline Mitchell, on their own behalf and on behalf of all the persons who have had land compulsorily acquired by the defendant, Roads and Maritime Services (now known as Transport for NSW) (TfNSW) for the WestConnex M4-M5 Link Project.
In the Principal Judgment I determined the application by the plaintiffs for an order to join Litigation Fund WCX Pty Ltd (Funder) as a defendant to the proceedings and for an order pursuant to s 183 of the Civil Procedure Act 2005 (NSW) (CPA) that the funds held by the plaintiffs' solicitors, Ironbridge Legal, deposited in its trust account by the Funder are held for the benefit of the plaintiffs to be applied towards their legal costs incurred as lead plaintiffs in these proceedings. During the hearing of the application, the Funder also made an oral application to stay it.
For the reasons set out in the Principal Judgment, I concluded that: 1. there should be no stay of the application (Principal Judgment at [94]-[99]); 2. the Funder should be joined as a defendant to the proceedings (Principal Judgment at [114]-[116]); 3. s 183 of the CPA does provide the power for the making of an order that the funds held by Ironbridge are held for the benefit of the plaintiffs to be applied towards their legal costs incurred as lead plaintiffs in these proceedings (Principal Judgment at [144]-[153]); and 4. the Funder paid funds into the Ironbridge trust account to be held on trust for the benefit of the plaintiffs for the purpose of paying the legal fees, disbursements and any other reasonable costs incurred by Ironbridge for the work done by them on behalf of the plaintiffs in these proceedings (Principal Judgment at [191]-[206]).
As a result of these conclusions in the Principal Judgment, on 20 September 2024, I made orders in chambers giving effect to those conclusions and invited the parties to provide submissions and evidence as to costs which I would determine on the papers.
In summary, the orders sought by the plaintiffs with respect to costs on the application which was the subject of the Principal Judgment are as follows: 1. The Funder pay the plaintiffs' costs on an indemnity basis. 2. The plaintiffs' costs be awarded as a specified gross sum. 3. The plaintiffs' costs be payable forthwith. 4. The plaintiffs be given liberty to make an application for a personal costs order against Robert Coshott (the Funder's sole director, secretary and shareholder) if the Funder fails to satisfy the costs order within 14 days.
TfNSW also seeks an order that the Funder pay TfNSW's costs of the application.
The Funder opposes these proposed costs orders, but does accept that it is appropriate for the Funder to pay the plaintiffs' costs to be assessed on an ordinary basis.
For the reasons set out below, I have concluded that: 1. The Funder should pay the plaintiffs' costs on an indemnity basis. 2. The plaintiffs' costs should be awarded as a gross sum. 3. The plaintiffs' costs should be payable forthwith. 4. The Funder should pay the costs of TfNSW. 5. I will not grant liberty to the plaintiffs to apply for a personal costs order against Robert Coshott if the Funder fails to satisfy the costs order within 14 days, but the plaintiffs may bring whatever further application they wish in respect of costs as particular circumstances arise.

[5]

The abandoned attempt of the Funder to adduce evidence at the hearing

On 7 June 2024, Ironbridge sent a letter to Mr Coshott stating that it was unclear as to how various materials contained in the exhibit accompanying his affidavit of 20 May 2024 (Exhibit RC-1) were relevant to any issue in the application. The letter concluded by notifying Mr Coshott that unless he provided a satisfactory explanation for the inclusion of the material in Exhibit RC-1, the plaintiffs would object to the admission of it and sought a detailed response by 5pm on 12 June 2024. Ironbridge did not receive any response from Mr Coshott by that time.
On 26 June 2024 at 12:25pm, Ironbridge sent an email to Mr Coshott referring to their letter of 7 June 2024 and noting that Exhibit RC-1 also contained material that appeared to be privileged and over which the plaintiffs had not waived privilege, including correspondence and legal advice provided to the plaintiffs by Ironbridge or their former solicitors. Ironbridge asked Mr Coshott to confirm what material from his affidavit and Exhibit RC-1 the Funder intended to tender at the hearing, requesting that Mr Coshott provide a substantive response no later than 4pm on 28 June 2024. The email concluded by indicating that, in the absence of a substantive response from Mr Coshott, the plaintiffs would be required to prepare an affidavit and submissions setting out why and how each of the documents in Exhibit RC-1 were privileged and would seek a costs order against the Funder if they were required to prepare those further documents.
On 26 June 2024 at 2:01pm, Mr Coshott sent an email to Ironbridge stating that the materials in Exhibit RC-1 were relevant to the plaintiffs' assertions regarding Ironbridge's trust account practices and to establishing that the Funder had, by the time that Ironbridge was instructed, already satisfied its obligation to provide funds pursuant to the Funding Agreement.
On 27 June 2024, Ironbridge sent an email to Mr Coshott contesting the relevance of the material in Exhibit RC-1 to any issue in dispute in the application and objecting to the admission of it. Ironbridge noted that Mr Coshott had not responded to the request that he clarify what material the Funder was proposing to tender at the hearing and asked for a substantive response by no later than 4:00pm on 28 June 2024. The email concluded by noting that it was critical for Mr Coshott to provide this confirmation to allow the plaintiffs to determine their position in respect of the privileged material in Exhibit RC-1 and repeated that if the Funder pressed for the admission of privileged material, the plaintiffs would seek a costs order against the Funder in relation to the further work required to prepare evidence and submissions to establish the privilege. Ironbridge did not receive any response from Mr Coshott by the time stipulated.
On 3 July 2024, Ironbridge sent a further email to Mr Coshott referring to his affidavit and Exhibit RC-1, noting that they had previously communicated to Mr Coshott that Exhibit RC-1 contained privileged and/or irrelevant material and Mr Coshott had not indicated what material the Funder intended to tender at the hearing. Ironbridge attached an objections schedule outlining the material to which objection was taken and a redacted copy of Exhibit RC-1 containing markings of the parts of each document, the admission of which was the subject of objection on the basis of privilege and/or relevance. The email concluded by requesting that Mr Coshott let Ironbridge know whether he agreed that this material was privileged and/or not relevant and should be redacted, and stated that they intended to provide TfNSW with a redacted version of Exhibit RC-1.
On 5 July 2024, Radith Khan, a solicitor employed by Ironbridge, affirmed an affidavit in support of the plaintiffs' claim of legal professional privilege in respect of certain materials in Exhibit RC-1 (Khan affidavit), which was filed by the plaintiffs on 5 July 2024 but ultimately not read at the hearing.
On 8 July 2024, during the hearing of the plaintiffs' application, I had the following lengthy exchange with Mr Cooper (counsel for the plaintiffs) and Mr Coshott in relation to the proposed tender by the Funder of the materials in Exhibit RC-1, which ultimately resulted in the Funder stating that it was not relying on the privileged material in Exhibit RC-1 (T6-12): HIS HONOUR: So turning to the affidavit from Mr Coshott. The exhibit, which is marked RC-1, has got a whole series of pages and excerpts that have been blanked. COOPER: Yes, your Honour. HIS HONOUR: All right. Is the affidavit of Radith Khan relevant to disclose what those blank parts are? COOPER: The affidavit can be read in a way that doesn't disclose the content of those blank pages. So, for example, the defendant would be capable of seeing Mr Khan's affidavit, but it supports why those redactions have been made. HIS HONOUR: Right. Is it necessary - and this is addressed to both of you - is it necessary for someone to see the material which is alleged to be privileged to make a ruling on whether or not the exhibit should go in without the blanking out? COOPER: Your Honour, in my submission, it will be most efficient to proceed that way. I have a version with me, which I was proposing hand up, which marks the material without redacting it. HIS HONOUR: Yes. How am I able to deal with that? Do I need to have someone else look at the material? Or is it agreed by both sides that I can look at the material to make rulings? COOPER: For our part, we wouldn't have any difficulty with your Honour seeing it because the nature of the privilege is that it goes to the ultimate issues in the proceedings, not the issues on this motion. So we don't have any difficulty. HIS HONOUR: All right. Yes. Mr Coshott, what do you say in relation to the privileged material? Do you press that all of the material contained in your exhibit should go into evidence without any of the blanking? COSHOTT: Yes, your Honour. HIS HONOUR: You do? COSHOTT: Yes. HIS HONOUR: Why is it relevant for me to see what counsel's opinion might be about the ultimate issue to be decided in this case? COSHOTT: Well, your Honour, it's this. Part of the evidence is that - and correspondence has been annexed to Mr Withane's affidavit, which asserts that it was the funder who was delaying and obstructing proceedings. It is to contradict that assertion, by putting those letters into evidence. HIS HONOUR: Is it being asserted as part of the case before me that I need to decide that there is a delay on the part of the funder that's causing any issue? COOPER: No, your Honour. We seek no finding of that kind. HIS HONOUR: Right. Then why do I need to see anyone's opinion about the underlying merits? COSHOTT: Then I don't press that part of my exhibit, but I do press pp 1 to 29, which are objected to on the grounds of privilege, and that's correspondence between Mr Withane and other members of Ironbridge Legal, and the funder. HIS HONOUR: And what do they establish? COSHOTT: They contradict para 7 of Mr Withane's primary affidavit, in which he infers that he had never come across Robert Coshott or the funder prior to October 2023, when in fact those documents reveal he had acted for the funder in regard to this very class action and in another matter since the beginning of 2023 and was well acquainted, and had dealt with, Mr Coshott and the funder through that almost one-year period. HIS HONOUR: All right. What do you say in relation to that material? COOPER: Your Honour, firstly, that material, the objection is a relevance objection, not a privilege objection. HIS HONOUR: Yes. COOPER: My clients have no privilege to any of that material because it relates to a completely different proceeding. It relates to a proceeding where the funder had engaged my instructing solicitors. It's clear on the face of the documents that it's a completely different proceeding. Given what Mr Coshott has just said about why it's relevant, it's probably most convenient if your Honour looks at para 7 of Mr Withane's affidavit. Contrary to what Mr Coshott just said, that doesn't convey the suggestion that that was the first time they'd ever met or had any dealings with each other. That's just the start of the narrative for this proceeding. HIS HONOUR: Mr Coshott, where in para 7 does it say that Mr Withane had never had any contact with- COSHOTT: It's the inference from: "In or around early October 23, I was contacted by an individual, Robert Coshott, when he asked me if I was willing to act on behalf of the plaintiffs in this proceedings." The documents in pp 1 to 29 show that that is not correct. In fact, he'd been acting for the funder in regard to the class action-- HIS HONOUR: To this-- COSHOTT: This class action. HIS HONOUR: --this class action. All right. COSHOTT: And it was later on that he moved to acting for the representative plaintiffs. HIS HONOUR: Why is the material - I'm using the court book numbers here - why is the material at pp 17 through to 46, why are my copies blanked out if it's a question of relevance only? COOPER: They shouldn't be, your Honour. That was an error. I think a second version was sent up to your Honour's chambers, which has those pages revealed. I apologise. HIS HONOUR: Well, the version that's attached to the Radith Khan has also got the same I don't have an unredacted version. COOPER: I'm sorry, your Honour. I've got them here if that helps. HIS HONOUR: All right. Thank you. COOPER: I'm sorry. Before I hand this up; this is the version that I was going to use for the privilege debate, which has the privileged material unredacted but marked. I don't think your Honour is going to look at those pages, so-- HIS HONOUR: I'm only going to look at what I'm dealing with at the moment, which is the relevance objection. COOPER: On that basis I think it could be handed up. HIS HONOUR: Thank you (handed up). COOPER: Can I just maybe short circuit-this process. We don't seek to contradict what Mr Coshott says about the dealings between my instructors and him that these pages reveal. The only reason we made the objection is to prevent your Honour being confused by thinking it was in this proceeding. HIS HONOUR: Well, Mr Coshott has just told me directly that these pages relate directly to these proceedings. That's the statement that was just made by Mr Coshott. COSHOTT: Yes, your Honour, and there are pages in there which are directly in relation to these proceedings. … HIS HONOUR: So how is an email on 24 March 2023 from Mr Withane to Mr Coshott, saying he would "love to meet next week" but he's in Singapore on business; how is that going to assist me in making a decision in this application? COSHOTT: Well, your Honour, if that para 7 is to stand as it is, with the inference that he'd never come across me before October 23, then if that stands, it's to attack para 7. If para 7 is not pressed to that or it's made clear that that's not what's inferred, then I don't need to put these in. HIS HONOUR: I wouldn't have inferred it, but, expressly, is it inferred that para 7 is that the contact was made with an individual that was not known in any way whatsoever to Mr Withane? COOPER: No, your Honour. HIS HONOUR: All right. Does that satisfy you? COSHOTT: Then I don't press those pages. HIS HONOUR: All right. So I will note that para 7, it is not expressly or by inference suggested by the plaintiffs that the contact was the very first contact with Mr Robert Coshott and that Mr Robert Coshott was not known to Mr Withane. … HIS HONOUR: All right. Now, the next objections are the privileged material. COOPER: As I understand what Mr Coshott has indicated, is that he's content for the redacted material to stay redacted. … HIS HONOUR: Yes. I think from when I was reading through, I could see where the boxes and the blank pages and the like were. But Mr Coshott tells me that he's pressing for unredacted versions to be placed into the exhibit. And I raised the question before, Mr Coshott: why am I assisted by the - COSHOTT: Yes, your Honour. HIS HONOUR: Why should I read the privileged material? COSHOTT: Your Honour, I've been thinking of what your Honour had said, and I don't press the redacted materials.
As a result, it was not necessary for the plaintiffs to read the Khan affidavit at the hearing of the application.

[11]

Costs incurred by the plaintiffs

In support of the application for costs, affidavit evidence has been provided from Trevor Withane of Ironbridge, who is a solicitor of 16 years' standing, 6 years of which have been as a solicitor admitted in New South Wales and 10 years of which have been as a solicitor admitted in England and Wales. In addition, Mr Withane practised as a barrister in England and Wales for approximately 2.5 years.
The evidence of Mr Withane is that of the amount of $106,413.50 inclusive of GST ($96,740.45 exclusive of GST) contained in the 14 September invoice, $70,614.50 inclusive of GST ($64,195.00 exclusive of GST) is directly referable to the application as the costs reasonably and necessarily incurred for the advancement of the application. He has marked the entries on the schedule of professional fees accompanying the 14 September invoice with red rectangles to signify those items which do not form part of the costs sought for the application, with the balance of the unmarked entries forming part of the calculation which he has made of the costs of the application.
The evidence of Mr Withane is that: 1. Solicitors of Ironbridge charged by the hour, at the following rates (exclusive of GST): 1. Mr Withane - $800.00 per hour; 2. Special Counsel - $650.00 per hour; 3. Senior Associate - $500.00 per hour; 4. Associate - either $375.00 or $250.00 per hour depending on level of experience; 5. Graduate Lawyer - $300.00 per hour; and 6. Paralegal - $200.00 per hour. 1. These hourly rates are comparable with the hourly rates ordinarily charged by a private firm of solicitors for work done by solicitors of comparable experience and expertise. 2. The work carried out as set out in the 14 September invoice was appropriately allocated between appropriately experienced solicitors and paralegals. 3. Most of the work as set out in the 14 September invoice was carried out by Mr Khan, an Associate at Ironbridge, who charged $375.00 per hour (comprising 60% of the time spent and 50% of the fees) and Mr Withane, who charged $800.00 per hour (comprising 27% of the time spent and 42% of the fees). 4. In his experience, between 70% and 85% of professional fees are recoverable on assessment on an ordinary party/party basis, and the fees recoverable on an assessment in this matter are likely to be at the higher end of that range. 5. The disbursements in the 14 September invoice totalling $747.95 plus GST are for court fees to file the notice of motion bringing the application ($718.00 plus GST) and search fees ($29.95 plus GST). 6. In addition, the plaintiffs incurred further disbursements totalling $58,895.00 plus GST for the following counsels' fees for work in relation to the application which were not included in the 14 September invoice: 1. Invoice dated 23 April 2024 from senior counsel (Jonathon Redwood SC) in the amount of $7,000.00 plus GST for work done between 16 March 2024 and 21 April 2024, $3,000.00 plus GST of which relates to the application; 2. Invoice dated 1 July 2024 from senior counsel (Jonathon Redwood SC) in the amount of $11,000.00 plus GST for work done between 4 May 2024 and 21 June 2024, all of which relates to the application; 3. Invoice dated 24 July 2024 from senior counsel (David McLure SC) in the amount of $27,300.00 plus GST for work done between 8 May 2024 and 8 July 2024, all of which relates to the application; and 4. Invoice from junior counsel (Henry Cooper) dated 20 September 2024 in the amount of $17,595.00 plus GST for work done between 1 May 2024 and 19 September 2024, all of which relates to the application. 1. A costs assessment on a party/party basis would total $114,208.70 plus GST, comprising professional fees of $54,565.75 plus GST (85% of $64,195.00) and disbursements of $59,642.95 plus GST. 2. A costs assessment on an indemnity basis would total $123,837.95 plus GST, comprising professional fees of $64,195.00 plus GST and disbursements of $59,642.95 plus GST. 3. The estimated fees in relation to this costs application total $10,770.00 plus GST, comprising: 1. estimated fees of senior counsel (Jonathon Redwood SC) - $2,000 plus GST; 2. estimated fees of junior counsel (Henry Cooper) - $3,420.00 plus GST; and 3. estimated professional fees of Ironbridge (Partner and Associate) - $5,350.00.
It appears that the total costs claimed by the plaintiffs in relation to the application (including this costs application) on an indemnity basis is $134,607.95 ($123,837.95 plus $10,770.00).

[13]

Discretion to award costs

The principal statutory provision containing the court's powers as to costs is s 98 of the CPA, which relevantly states: (1) Subject to rules of court and to this or any other Act - (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis. (2) Subject to rules of court and to this or any other Act, a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court. (3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings. (4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to - (a) costs up to, or from, a specified stage of the proceedings, or (b) a specified proportion of the assessed costs, or (c) a specified gross sum instead of assessed costs, or (d) such proportion of the assessed costs as does not exceed a specified amount. …
The discretion to award costs under s 98 of the CPA is broad and the section itself is to be construed liberally: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11, Gaudron and Gummow JJ at [21]. The discretion is, however, subject to the rules of court, including the Uniform Civil Procedure Rules 2005 (NSW) (UCPR).
Rules 42.1, 42.2 and 42.4 of the UCPR relevantly provide: 42.1 General rule that costs follow the event Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs. 42.2 General rule as to assessment of costs Unless the court orders otherwise or these rules otherwise provide, costs payable to a person under an order of the court or these rules are to be assessed on the ordinary basis. … 42.4 Power to order maximum costs (1) The court may by order, of its own motion or on the application of a party, specify the maximum costs that may be recovered by one party from another. …
A number of observations regarding the exercise of the discretion to award costs made by McHugh J in Oshlack at [67]-[68] should be kept in mind, as summarised below: 1. An award of costs rests on fairness between the parties, with the unsuccessful party bearing the liability for the costs of the proceedings. 2. The primary purpose of an award of costs is to indemnify the successful party, not to punish an unsuccessful party because, had the proceedings not been brought, the successful party would not have incurred the expense of them. 3. As a matter of policy, one beneficial by-product of the compensatory purpose may well be to instil in a party contemplating commencing the proceedings a sober realisation of the potential financial expense involved.

[14]

Indemnity costs - representative proceedings

As is plain from s 98(1)(c) of the CPA, the court has the discretion to order that costs be awarded on the ordinary basis or on an indemnity basis.
Rule 42.5 of the UCPR provides: 42.5 Indemnity costs If the court determines that costs are to be paid on an indemnity basis: (a) in the case of costs payable out of property held or controlled by a person who is a party to the proceedings: (i) in the capacity of trustee, executor, administrator or legal representative of a deceased estate, or (ii) in any other fiduciary capacity, all costs (other than those that have been incurred in breach of the person's duty in that capacity) are to be allowed, and (b) in any other case, all costs (other than those that appear to have been unreasonably incurred or appear to be of an unreasonable amount) are to be allowed.
There is a general rule that a trustee who has acted honestly is entitled to an indemnity of the trust fund for any legal costs incurred in administration of the trust: Miller v Cameron (1936) 54 CLR 572 at 578-579; [1936] HCA 13. A legal personal representative may be similarly entitled to be paid legal costs out of the estate on an indemnity basis: Nowell v Palmer (1993) 32 NSWLR 574, Mahoney JA (Meagher and Handley JJA agreeing) at 581. The indemnity basis for the recovery of such costs is commonly referred to in shorthand as "trustee's costs".
There is also specific provision in r 42.25 of the UCPR for the court to make an order with respect to the costs incurred by a person who is a party to proceedings in the capacity of trustee to be entitled to be paid their costs out of the fund held by the trustee.
In G E Dal Pont, Law of Costs (5th ed, 2021, LexisNexis Butterworths), the author at [16.34] said as follows (citations omitted): The court rules reflect no more than the notion recognised by the general law that persons who are engaged in legal proceedings in a representative capacity - that is, representing the interests of others - should not, if a costs order is made in their favour, be out of pocket because of the litigation. On occasion, this is described via the 'common fund basis' of taxation, which reflects the indemnity basis. Some of the main illustrations in this respect are discussed below.
The "main illustrations" then discussed by in Dal Pont at [16.35]-[16.38] respectively are trustees, a director against the company and the costs of lawyers engaged by liquidators.
At [16.35], Dal Pont deals with costs orders made in favour of trustees, saying (emphasis added, citations omitted): If a costs order is made in a trustee's favour, whether pursuant to the court rules or the general law, a trustee (or other representative such as an executor, a next friend or a person appointed to represent a class) merits a costs award on a basis more generous than the party and party basis. To this end, the courts variously have made orders on solicitor and client or indemnity bases (termed 'special costs orders') in this context. In the words of an English judge, 'no costs shall be disallowed, except in so far as those costs or any part of their amount should not, in accordance with the duty of the trustee or personal representative as such, have been incurred or paid, and should for that reason be borne by him personally'. …
The case cited in Dal Pont for the proposition that a person appointed to represent a class merits a more generous costs order than one made on the ordinary basis is NIAA Corporation Ltd (in liq), Miller v Hindmarsh, Supreme Court of New South Wales, 3 September 1993, unreported, BC9303640, which involved respective defendants who had each been appointed to represent a class of creditors of the company and the purpose of the proceedings was to determine the respective rights of those classes of creditors in relation to certain funds held by the company and under the control of the liquidators. McLelland CJ in Eq said at 2: It seems to me that in proceedings of that kind where representative orders have been made, [a] party who has been appointed to represent a class and therefore persons who are not themselves parties to the proceedings, have duties to other members of that class which are analogous to fiduciary duties in respect of the conduct of the litigation, and for that reason it is appropriate that in circumstances where they are entitled to an order for costs or where an order for costs has already been made in their favour the costs should be taxed on the trustee basis. It would, in my view, be otherwise where the defendants had not been appointed as representative parties because in such a case there would be no fiduciary obligation and normally the common fund basis would be appropriate in such an application as the present.
In Latham v Hubbard; Estate of Ross [2014] NSWSC 805, White J at [17] cited an earlier version of Dal Pont, extracting a passage in which the author described the situation where a court makes an order entitling a trustee to costs out of the trust fund, noting that the court will commonly order that such costs be quantified on an indemnity basis, also termed the "trustee" or "common fund" basis, which "reflects the policy that persons engaged in proceedings in a representative capacity should not, if a costs order is made in their favour, be out of pocket because of the litigation". White J said at [18]: As this passage makes clear, a trustee's right to costs "on the trustee basis" entitles the trustee to all costs properly incurred in the exercise of his or her duties as trustee. It is an incident of the trustee's right to be indemnified in respect of expenses properly incurred.
There do not appear to be any authorities on the basis on which costs should be ordered in favour of plaintiffs acting in representative proceedings under Pt 10 of the CPA. As I noted in the Principal Judgment at [130]: It is also important in the context of Part 10 of the CPA to recognise that the lead plaintiff in representative proceedings has the conduct of the proceedings on behalf of the class members and owes fiduciary obligations to them: Wigmans v AMP Ltd (2021) 270 CLR 623; [2021] HCA 7 at [117], citing Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28, French CJ, Bell, Gageler and Keane JJ at [40] and Dyczynski v Gibson [2020] FCAFC 120, Murphy, Lee and Colvin JJ at [209].
While I discern that there is no general principle in any of the authorities that a party who commences proceedings on a representative basis is generally entitled to an award of their costs on an indemnity basis, that factor together with the other particular factual circumstances of the case will form part of the general discretion whether to award costs on an indemnity basis.

[15]

Indemnity costs - conduct

A summary of the relevant principles relating to the discretion to award costs on an indemnity basis based on the conduct of a party can be found in Cappello v HomeBuilding Pty Ltd [2023] NSWCA 109, in which Mitchelmore JA (with whom Simpson AJA and Meagher JA agreed) at [46]-[48] stated: [46] The Court has a discretion to award costs on an ordinary or indemnity basis. Usually costs will follow the event, unless the Court considers that some other order ought to be made: Civil Procedure Act 2005 (NSW), s 98; Uniform Civil Procedure Rules 2005 (NSW), r 42.1; Collier v Country Women's Association of New South Wales [2018] NSWCA 36 at [116] ("Collier"). [47] For an order of indemnity costs to be made, the conduct of the party against whom such costs are sought must usually exhibit some special or unusual feature: Collier at [117]. The focus is on the way the litigation was conducted: Mead v Watson [2005] NSWCA 133 at [8]-[9]. For example, the discretion may be enlivened where a party persists in what should have been seen to be a hopeless case, such as where the case was unduly prolonged by groundless contentions: Ferella at [36]; Liverpool City Council v Estephan (Executor and Administrator of the Estate of the late Jocelyn Estephan and Ors) [2009] NSWCA 161 at [93] ("Liverpool City Council"). It has also been said that indemnity costs may be awarded where the unsuccessful party's conduct was unreasonable or delinquent: Amirbeaggi v Matrix Group Co Pty Ltd [2021] NSWCA 21 at [18]. [48] The categories of circumstances in which the discretion may be exercised are not closed: Liverpool City Council at [93]. Ultimately, the question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on the ordinary basis: Liverpool City Council at [93].
As I have already mentioned, r 42.5 of the UCPR details the costs to be allowed when the court orders that costs are to be paid on an indemnity basis.

[16]

Submissions of the plaintiffs

The plaintiffs seek their costs of the application and this costs application on an indemnity basis, to be paid as a specified gross sum in the amount of $148,068.75 (including GST), and payable forthwith. The plaintiffs also request liberty to apply for a personal costs order against Mr Coshott, to be exercised if the Funder does not pay its ordered costs within 14 days.
The submissions of the plaintiffs in support of their application that the Funder should pay their costs on an indemnity basis can be summarised as follows: 1. There are two alternative bases for an indemnity costs order against the Funder: first, that the plaintiffs were acting in a representative and fiduciary capacity and, secondly, that the Funder's conduct was unreasonable. 2. In relation to the first basis, the plaintiffs were acting in a representative and fiduciary capacity and should not, if a costs order is made in their favour, be out of pocket for their costs, referring to Dal Pont at [16.34]-[16.37] and Latham at [17]. Specific recognised instances of this general policy include the costs of trustees, directors suing companies and lawyers engaged by liquidators being assessed on an indemnity basis, and those circumstances apply by analogy here. The plaintiffs represent the other members of the class and owe fiduciary duties to them, as recognised in the Principal Judgment at [96] and [130]. The Funder knew or ought to have known that fact, and that it was not free to pursue its own commercial interests where they ran contrary to that of the other interested parties. The plaintiffs' duties compelled them to bring the application to resolve the dispute between the Funder and Ironbridge as to the ownership of the trust monies after the Funder made demands for repayment of the funds held by Ironbridge to which it was not properly entitled, as found in the Principal Judgment at [62]. The issue was also stultifying the proceedings, as found in the Principal Judgment at [146]. Although no authority has been identified where an indemnity costs order has been sought in representative proceedings under Pt 10 of the CPA, this reflects the unusual nature of the dispute, and NIAA Corporation supports the position that those who sue in a representative capacity under duties to a class analogous to fiduciary duties should receive their costs on an indemnity basis. The plaintiffs should not be out of pocket for bringing the application. 3. In relation to the second basis, the Funder acted unreasonably by engaging in the following conduct and has made groundless contentions that unduly prolonged the application (citing Cappello at [47]): 1. The Funder's baseless opposition to being joined as a party, while at the same time advancing submissions on the substance of the dispute (referring to the Principal Judgment at [115]). 2. The Funder's submissions on the key substantive issue of the ownership of the funds "simply fail[ed] to grapple" with the applicable law (referring to the Principal Judgment at [191]). 3. The Funder's attempt to adduce voluminous privileged material in Exhibit RC-1 for no apparent forensic purpose, which was not pressed at the hearing, resulted in significant unnecessary work having to be undertaken by the plaintiffs including identifying, redacting and proving privilege claims over that material. 4. The Funder declined to brief counsel to assist and appear and instead made submissions through Mr Coshott which were of no assistance to the court. 5. The unsubstantiated and unexplained assertions of the Funder that Mr Coshott had identified a new legal representative and group member to take over conduct of the proceedings from the representative plaintiffs (referring to the Principal Judgment at [142]). Mr Coshott was unwilling to provide basic information as to the Funder's capacity to fund the proceedings, per the findings in the Principal Judgment at [148].

[17]

Submissions of the Funder

The submissions of the Funder in relation to the plaintiffs' application for an indemnity costs order can be summarised as follows: 1. A notice of intention to appeal the Principal Judgment has been lodged. 2. An application to substitute the current representative plaintiffs has been filed and new solicitors and counsel have been briefed. 3. Rule 42.34 of the UCPR is relevant to making a costs order given that the amount in dispute was less than $500,000. 4. The submission of the plaintiffs that they are acting in a representative capacity and are tantamount to a trustee overlooks the fact that they are also representing themselves, citing a security for costs judgment in this matter of the Court of Appeal: Mitchell v Transport for NSW [2022] NSWCA 141 at [8], where Meagher and Mitchelmore JJA noted in the context of the application of r 42.21 of the UCPR that the representative plaintiffs were suing for their own benefit and for the benefit of the other group members. The plaintiffs are not trustees because they are suing for their own benefit and for the benefit of other persons. 5. The Funder has satisfied its obligations under the Funding Agreement and is entitled to its share of the proceeds from the representative proceedings, because the Funder had provided the maximum amount of funding specified in the Funding Agreement (being $500,000) to the plaintiffs by 9 November 2022. Following that day, the Funder has provided funds to the plaintiffs for its costs pursuant to the Ironbridge engagement letter, requiring the Funder to be jointly and severally liable for the fees incurred by Ironbridge. 6. The assertion of the plaintiffs that in April 2022 the Funder was the litigation funder of the representative proceedings is contrary to the evidence: the Funder had long before fulfilled its obligation to fund the class action pursuant to the Funding Agreement. 7. In essence, the proceedings were not stultified by the dispute between the Funder and the plaintiffs as to the ownership of the trust monies, but rather the inability of the plaintiffs to obtain further funding and the exhaustion of the $135,000, following payment of $90,000 for Ironbridge's fees incurred since April 2024 and $45,000 for the cost of substituting the representative plaintiffs. 8. The Funder's conduct was not unreasonable because: 1. The Funder is entitled to take a primary objection to being joined to the proceedings which, if upheld, would defeat the whole of the application. The Funder should also, in the event that its objection was not upheld, be able to put forward arguments on the substance of the dispute and oppose the relief sought by the plaintiffs so that the Funder is not putting all of its "eggs in the one basket". 2. The Funder sought to adduce the documents in Exhibit RC-1 to counter the plaintiffs' assertions that the Funder had been hindering the progress of the class action. The Funder did not press admission of that exhibit at the hearing because the plaintiffs withdrew those assertions. The making of assertions which are later withdrawn is unreasonable conduct, and the plaintiffs have therefore acted unreasonably here. Moreover, the plaintiffs have resurrected those assertions as to the unreasonableness of the Funder's conduct in the proceedings. 3. If it is unreasonable for a party to decide not to brief counsel, it then follows that every self-represented party is acting unreasonably and should be subject to punitive costs orders. 4. The plaintiffs have been served with the application for substitution of the representative plaintiffs and received Infralegal's letter of 30 July 2024. There were no findings in the Principal Judgment that the Funder failed to explain how substitution of a new lead plaintiff and new legal representatives would be in the best interests of the group members, or failed to provide evidence as to the capacity of the Funder to fund the proceedings, reciting the text of [142] and [148] of the Principal Judgment. 1. If the submissions of the plaintiffs that the Funder has instigated the dispute and compelled the plaintiff to bring proceedings to resolve it are accepted, then every defendant who is unsuccessful in disputing a plaintiffs' claim should be ordered to pay lump sum indemnity costs, which cannot be accepted.

[18]

Submissions in reply of the plaintiffs

The submissions in reply of the plaintiffs to the Funder can be summarised as follows: 1. The filing of a notice of intention to appeal from the Principal Judgment and the filing of an application for a substitution of a new lead plaintiff in place of the current lead plaintiffs are not relevant to the costs of the application. It is unclear what relevance the Funder suggests they have. 2. Rule 42.34 of the UCPR is not relevant to this costs determination because it is concerned with proceedings brought in this court which could, and ought to, have been brought in the District Court due to the monetary amount in issue. It has no application to interlocutory disputes, such as the present one, in proceedings that have been properly commenced in this court. 3. The decision in Mitchell v Transport for NSW [2022] NSWCA 141 at [8] concerning r 42.21(1)(e) of the UCPR is not relevant as it concerns security for costs, providing that one circumstance where security may be ordered is where "a plaintiff is suing not for his or her own benefit, but for the benefit of some other person". The fact that the plaintiffs bring these proceedings both on behalf of group members and on their own behalf does not gainsay the application of the principles relied upon by the plaintiffs from Dal Pont, Latham and NIAA Corporation. 4. The $500,000 cap in the Funding Agreement is not relevant because the plaintiffs are not seeking to be indemnified pursuant to any contractual right under the Funding Agreement. Rather, the plaintiffs are seeking an order for indemnity costs based on the circumstances attending the application, as outlined above in the plaintiffs' submissions in chief. 5. It is unclear what assertions against the Funder were allegedly made and withdrawn by the plaintiffs. The plaintiffs have never made any assertions that called for the Funder to attempt to adduce clearly privileged material into evidence on the motion, but rather have continually disputed the relevance of such material. The material was clearly irrelevant, as was explained to Mr Coshott in Ironbridge's correspondence of 7, 26 and 27 June 2024 and 3 July 2024.

[19]

Consideration

In all the circumstances of this case, I consider that the plaintiffs should receive their costs on an indemnity basis.
The plaintiffs were successful in their application, entitling them to an order for their costs, which the Funder concedes. The application was one that the plaintiffs were effectively forced to bring because the Funder was demanding the return of the funds in the Ironbridge trust account. As I found in the Principal Judgment at [204]: In my assessment, the outward manifestation of the intentions of the parties within the totality of the circumstances amply demonstrate that the Funder paid funds into the Ironbridge trust account to be held on trust for the benefit of the plaintiffs for the purpose of paying the legal fees, disbursements and any other reasonable costs incurred by Ironbridge for the work done by them on behalf of the plaintiffs in these proceedings.
Those legal fees, disbursements and costs were being incurred by the plaintiffs in their position as representatives of the members of the class to whom they owed fiduciary duties in the conduct of the proceedings under Pt 10 of the CPA. The plaintiffs were put to the expense of bringing an application in respect of funds to which the Funder was asserting title so that the members of the class could have the benefit of the legal work to which those fees, disbursements and costs related. The plaintiffs could not allow the Funder to obtain those funds without asserting their own interest in those funds on behalf of all group members. I consider that the observations in Dal Pont about a party incurring costs in a representative capacity and the parallels with the circumstances and the decision in NIAA Corporation are apt. The plaintiffs should not be left out of pocket for making an application of the type which was protective of the interests of those for whom they are representative and owe fiduciary duties. The fact that this included their own interests does not disentitle them from obtaining such an indemnity.
This conclusion is fortified by my finding in the Principal Judgment at [146] that the dispute as to the ownership of the funds in the Ironbridge trust account was: … preventing these proceedings from progressing because the plaintiffs are unable to fund the proceedings themselves in circumstances in which they cannot just act in their own interests but owe wide fiduciary duties to all the other class members.
I consider that by the Funder making a demand for the payment of the funds in the Ironbridge trust account to it, the plaintiffs were placed in a situation where they had no alternative other than to make an application to the court to resolve the dispute over those funds. Until that dispute was resolved, the plaintiffs did not have sufficient funds of their own to progress the proceedings on behalf of the group members to whom they owed fiduciary duties. Those circumstances require that the plaintiffs be fully compensated by the Funder paying the plaintiffs' costs on an indemnity basis. Such an approach meets the considerations mentioned in Oshlack at [67]-[68], particularly resting on the fairness between the plaintiffs and the Funder due to conditions which had been created by the Funder.
Although the presentation of the Funder's submissions at the hearing of the plaintiffs' application was of little assistance to me across multiple bases, I do not consider that it could generally be described as being at the level of "unreasonable" in the sense described in Cappello. Many of the arguments that were put did not have a sound basis but I do not consider them, when assessed as a whole, to be groundless or hopeless. In this regard, I have given particular weight to the fact that an application of the sort made by the plaintiffs was novel in the context of Pt 10 of the CPA and it was not clear on the existing authorities that s 183 of the CPA could be used for the purpose that the plaintiffs were seeking.
Many of the arguments that were put by the Funder on this costs application have also been of no assistance to me. The Funder failed to explain why the filing of the notice of intention to appeal the Principal Judgment has any relevance to the costs orders to be made arising from it. Similarly, irrelevant arguments about the purported operation of r 42.34 of the UCPR, the $500,000 funding cap in the Funding Agreement (to the effect of repeating an argument I rejected in the Principal Judgment at [199]) and the proper application of Mitchell v Transport for NSW [2022] NSWCA 141 were also very poorly explained by the Funder.
But the Funder is not to be penalised by an order for indemnity costs for failing to obtain adequate legal representation to present the case in a more soundly reasoned way, or for merely being unsuccessful. The purpose of a costs order is not punitive to the unsuccessful party, it is compensatory to the successful party.
In relation to the Funder having put the plaintiffs to the unnecessary time, trouble and expense of asserting a claim of legal professional privilege in respect of certain materials in Exhibit RC-1, the Funder's continued reliance on that material until its capitulation on it at the hearing was so thoroughly misconceived, meritless and groundless that I do think that it was unreasonable in a Cappello sense. The Funder's attempt to adduce clearly privileged material in Exhibit RC-1 as evidence was not required because there was no need for the Funder to contest an assertion that the plaintiffs were not making. The plaintiffs told the Funder why that material was irrelevant and put the Funder on notice that the plaintiffs would be required to prepare an affidavit and submissions setting out why and how each of the documents in Exhibit RC-1 were privileged and would seek a costs order against the Funder if they were required to prepare the further documents. The Funder failed to adequately explain its position in response, leading to the unnecessary work being performed by the plaintiffs.
Even if I were not minded to order that the Funder pay the plaintiffs' costs on an indemnity basis for the reasons I have set out above, I would have granted an indemnity costs order in respect of the plaintiffs' costs for performing that unnecessary work. The plaintiffs have not provided me with a break-down of the costs associated with contesting the privileged material but from my own calculations it would appear to be in the region of about $10,000.

[21]

Legal principles - gross sum costs

Section 98(4)(c) of the CPA gives a discretion to the court to order that costs be paid as a specified gross sum instead of assessed costs. The power to award costs in s 98 of the CPA is expressly subject to the rules of court.
In Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213, Giles JA at [21]-[22] dealt with the matters to be taken into account in determining whether gross sum costs should be awarded and, if so, the approach to be taken by the court in its calculation, saying: [21] The power conferred by r6(2) is not confined, and may be exercised whenever the circumstances warrant its exercise. It may appropriately be exercised where the assessment of costs would be protracted and expensive, and in particular if 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 (Leary v Leary (1987) 1 WLR 72; Sparnon v Apand Pty Ltd (von Doussa J, 4 March 1998, unreported); Beach Petroleum NL v Johnson (1995) 57 FCR 119; Hadid v Lenfest Communications Inc [2000] FCA 628). [22] Of its nature, specification of a gross sum is not the result of a process of taxation or assessment of costs. As was said in Beach Petroleum NL v Johnson at 124, the gross sum "can only be fixed broadly having regard to the information before the Court"; in Hadid v Lenfest Communications Inc at [35] it was said that the evidence enabled fixing a gross sum "only if I apply a much broader brush than would be applied on taxation, but that ... is what the rule contemplates". The approach taken to estimate costs must be logical, fair and reasonable (Beach Petroleum NL v Johnson at 123; Hadid v Lenfest Communications Inc 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).
In Hamod v State of New South Wales [2011] NSWCA 375, Beazley JA (with whom Giles and Whealy JJA agreed) at [813]-[820] summarised the relevant principles in the following way: [813] I have already set out the relevant provisions of s 98. The discretion thereby conferred upon the court is not confined and may be exercised whenever the circumstances warrant its exercise, having regard to the scope and purpose of the provision: Harrison & Anor v Schipp [2002] NSWCA 213; 54 NSWLR 738 per Giles JA at [21]-[22]. In Harrison v Schipp, Giles JA considered that the discretion in s 98(4) may be exercised where the assessment of costs would be protracted and expensive and, in particular, if it appeared that a party obliged to pay the costs would not be able to meet a liability of the order likely to result from the assessment. However, his Honour stated, at [22]: "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." … [815] In Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119; 135 ALR 160, von Doussa J noted that the specified gross sum costs procedure was particularly useful in complex cases, that the power must be exercised judicially and only after giving the parties an adequate opportunity to make submissions, and that before exercising the power the court should be confident that the approach taken to estimate costs is fair, logical and reasonable. [816] 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]. [817] 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. [818] The power may also be exercised where a party's conduct has unnecessarily contributed to the costs of the proceedings, especially where the costs incurred have been disproportionate to the result of the proceedings: Leary v Leary [1987] 1 WLR 72; [1987] 1 All ER 261; Sony Entertainment (Aust) Ltd v Smith; Microsoft v Jiang (2003) 58 IPR 445; [2003] FCA 101; Ritchie's Uniform Civil Procedure NSW at [s 98.60]). [819] The assessment of any lump sum to be awarded must represent a review of the successful party's costs by reference to the pleadings and complexity of the issues raised on the pleadings; the interlocutory processes; the preparation for final hearing and the final hearing: Smoothpool v Pickering [2001] SASC 131. In the exercise of its discretion the court is not required to undertake a detailed examination of the kind that would be appropriate to taxation or formal costs assessment: Harrison v Schipp at 743; Hadid v Lenfest Communications Inc at [35]; Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR 1 at 5; [1999] FCA 673. [820] 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): Beach Petroleum NL v Johnson (No 2); Leary v Leary; Harrison v Schipp at 743; Sparnon v Apand Pty Ltd (FCA, 4 March 1998, unreported). The approach taken to estimate the costs to be ordered must be logical, fair and reasonable: Beach Petroleum NL v Johnson at 164-165; Hadid v Lenfest Communications Inc at [27]; Harrison v Schipp at 743. This may involve an impressionistic discount of the costs actually incurred or estimated, in order to take into account the contingencies that would be relevant in any formal costs assessment: Leary v Leary at WLR 76 per Purchas LJ; Beach Petroleum NL v Johnson (No 2) at 123; Auspine Ltd v Australian Newsprint Mills Ltd at 164-165.
Ball J in Baychek v Baychek [2010] NSWSC 987 at [11] explained the relationship between a party's actual costs and the gross sum claimed in these terms: … Implicit in this principle is that the gross sum bear a reasonable relationship to the actual costs of the party making the application, and to the costs that that party might reasonably be expected to recover on assessment. That means, among other things, that there must be a reasonable evidentiary basis for the order the court makes. That evidentiary basis is normally provided by the costs applicant in the form of an affidavit setting out the actual costs incurred and how they were calculated. Often, the evidence also includes evidence of the amount that is likely to be recovered on assessment.
In undertaking the exercise of calculating a gross sum, in Penson v Titan National Pty Limited (No 3) [2015] NSWCA 121, JC Campbell AJA at [7] said that (citations omitted): Because s 98(4)(c) makes clear that a gross sum costs order is intended to be an alternative to assessed costs, the meticulous item by item examination of a bill of costs that occurs in the course of an assessment need not be engaged in. A "broader brush" approach can be adopted. However, because the discretion is one which must be exercised judicially the Court must arrive at a figure that it is confident does justice between the parties, even though the full assessment process has not been gone through. In Hamod at [814] this Court approved the statement in Richie's Uniform Civil Practice (NSW) that "the courts have typically applied a discount in assessing costs on a gross sum basis".
The Court of Appeal of this court recently conveniently stated the relevant principles (principally those distilled in Harrison and Hamod) in Ahern v Aon Risk Services Australia Ltd (No 2) [2022] NSWCA 39, Meagher, White and Brereton JJA saying at [14]-[18]: [14] The principles relevant to the Court's exercise of discretion under s 98 were set out in Hamod v New South Wales [2011] NSWCA 375 at [813]-[820] (Beazley JA) (Hamod). Her Honour noted at [813] [setting out that paragraph, as extracted above, in full]. [15] 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] [16] 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]. [17] 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]. [18] 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].

[22]

Submissions of the plaintiffs

The plaintiffs submit that, applying the principles in Hamod, a gross sum costs order is appropriate in this case for the following reasons: 1. The Funder was the party responsible for the incurring of costs because it instigated the dispute as to ownership of the trust monies and compelled the plaintiffs to bring the motion (Hamod at [816]). 2. The Funder has refused to provide evidence of its ability to meet a costs order, creating a risk that it will not ultimately discharge its costs liability (Hamod at [816]). 3. There is no circumstance that would inhibit the court from being able to arrive at a gross sum fairly and confidently, based on the plaintiffs' evidence (Hamod at [813] and [815]). 4. The costs that have been incurred on the plaintiffs' application are disproportionate to the result of the proceedings because the parties have incurred substantial costs to clarify the beneficial ownership of trust funds without advancing the substantive proceedings (Hamod at [818]). 5. The plaintiffs' application has been a satellite dispute distracting from the real issues in the proceedings and the court should take all measures to avoid further such disputes, including a contested costs assessment (citing James v Australia and New Zealand Banking Group Ltd [2017] NSWCA 84, Basten JA (with whom Simpson JA agreed) at [3]). A contested costs assessment in this case will occasion delay. 6. The principles for calculating the gross sum include those in Harrison at [22], Hamod at [820] and Baychek at [11], collected in Hoho Property Pty Ltd v Bass Finance No 37 Pty Ltd [2022] NSWSC 1062 by Rees J at [12]-[15]. 7. The plaintiffs' evidence is detailed and has been prepared by reference to the actual bills and costs estimates that are relevant to the application (citing Hamod at [820]). 8. Rule 42.5 of the UCPR governs the calculation of indemnity costs. Rule 42.5(a) is engaged because the plaintiffs are entitled to defray their costs using the funds held by Ironbridge. While the entirety of the plaintiffs' costs order will not be satisfied by recourse to the trust monies, the better view is that r 42.5(a) of the UCPR is still engaged where costs are partially to be paid from a fund. Alternatively, r 42.5(b) of the UCPR would govern the assessment, so that all costs reasonably incurred by Ironbridge would be allowed.

[23]

Submissions of the Funder

The submissions of the Funder in relation to the making of a gross sum costs order are as follows: 1. The submission of the plaintiffs that a gross sum costs order is appropriate because the costs incurred are disproportionate to the result of the proceedings is an admission that the costs claimed by the plaintiffs are contrary to s 60 of the CPA and s 172 of the Legal Profession Uniform Law 2014 (NSW) (LPUL), by application of s 76 of the Legal Profession Uniform Law Application Act 2014 (NSW). 2. The plaintiffs' evidence of their costs incurred in respect of the application is inadequate for the following reasons: 1. There are some items in the 14 September invoice which are not within red rectangles and it is unclear whether those items are said to be costs of the application. If the items within the red rectangles are claimed to be costs of the application, they cannot all be because some of them (for instance, all those on page 2 of 17 of the schedule of professional fees accompanying the 14 September invoice) pre-date receipt of the Funder's email of 18 April 2024 by which the Funder requested payment forthwith of the monies held in Ironbridge's trust account to the Funder, and the receipt of which the plaintiffs claim was the instigation of the application. 2. If the items not within red rectangles are the costs of the application, many of those items pre-date the Funder's termination of the Ironbridge engagement letter and request for payment out of the monies in Ironbridge's trust account on 19 April 2024. Many of those items are clearly unrelated to the application or insufficiently described to allow a positive determination as to whether they include work referrable to the class action or application. A number of those items include multiple elements. The same applies to the items surrounded by the red rectangles. 1. The court is not in a position to be satisfied that the costs claimed by the plaintiffs are proportionately and reasonably incurred and proportionate and reasonable in amount. It is inappropriate for the court to be asked to assess the plaintiffs' costs on a gross sum basis given the inadequacy of the plaintiffs' evidence. It is appropriate for the plaintiffs' party/party costs to be assessed on an ordinary basis, whereas a gross sum costs order would take away the right of the Funder and the group members to require an assessment of the costs claimed by the plaintiffs. 2. Following the emails exchanged between Ironbridge and the plaintiffs and the payment of the 14 September invoice, either: 1. the plaintiffs' costs of the application have been improperly paid out of the monies held in the Ironbridge trust account, which are held for the plaintiffs for the purpose of funding the class action (referring to the Principal Judgment at [204]); or 2. the plaintiffs' costs of the application have been paid out of the $135,000 held in the Ironbridge trust account and the Funder should not be required to pay these costs twice. 1. In light of the invoices issued by Jonathon Redwood SC, which demonstrate that Jonathan Redwood SC continued to work on the matter while he was overseas, it should not be accepted that David McLure SC was only briefed because Jonathon Redwood SC was travelling overseas and could not appear. The invoices of David McLure SC and Jonathon Redwood SC show that both senior counsel clearly carried out the same work, including reviewing documents, giving advice and settling written submissions. The Funder should not have to pay for the plaintiffs having two senior counsel at the one time. Likewise, the Funder should not have to pay for the duplication of the solicitors' costs caused by the briefing of two senior counsel.

[24]

Submissions in reply of the plaintiffs

The plaintiffs' submissions in reply on the issue of a gross sum costs order are as follows: 1. The Funder's submission relying on s 60 of the CPA and s 172 of the LPUL is an improper mischaracterisation of the plaintiffs' submission concerning the costs being disproportionate to the result of the proceedings. The plaintiffs' submission is directed to the proposition that the plaintiffs have been forced, because of the Funder's erroneous assertions and contentions, to incur substantial costs of this application, which costs are ultimately disproportionate to the result obtained, namely the clarification of the beneficial entitlement to the funds in line with the plaintiffs' position. Having been forced to bring the application, the plaintiffs and their representatives dealt with it as efficiently as was possible in the circumstances. 2. The plaintiffs' evidence explains that the red rectangles are superimposed on certain entries in the 14 September invoice and counsel's invoices, being those entries which do not relate to the application and therefore for which no costs have been claimed. Mr Withane, as the solicitor on the record, has clearly explained in his affidavit the criteria he has used to identify the items to claim, and it is apparent on the face of the 14 September invoice and the invoices of counsel that this has been done with appropriate care and attention to each entry. That evidence should be accepted. 3. The Funder has made a baseless assertion that the plaintiffs' costs of the application had been improperly paid out of the Ironbridge trust account. The costs of the application are within the legitimate expenses for which the trust funds can be deployed, being "costs incurred … in these proceedings", as found in the Principal Judgment at [204]. The Funder's submission is incoherent: on no view is the Funder being asked to pay the costs of the application "twice". To the extent the trust funds have been used to pay the costs of the application, the Funder (as the unsuccessful party to the application) should replenish those funds through a costs order.

[25]

Consideration

In my opinion, this is a quintessential case for the exercise of my discretion under s 98(4)(c) of the CPA to make a gross sum costs order instead of an order for assessed costs.
The proceedings have been on foot since 30 March 2021 and yet the evidence has not been completed. The Funder has been funding the proceedings since they were commenced and in that time there have been five changes of solicitors, including by the Funder moving to terminate the Ironbridge engagement letter on 19 April 2024 (as stated in the Principal Judgment at [62]). Given the ongoing history of disputes between the plaintiffs and the Funder, it appears to me that it is highly desirable to avoid the expense, delay and aggravation likely to be involved in a contested and protracted costs assessment between those parties. These are matters which favour the making of a gross sum costs order, as identified in Harrison at [21] and Hamod at [816]-[817].
The Funder has elected not to place evidence before the court of its ability to meet an order resulting from a costs assessment, meaning that I am unable to be satisfied that the Funder as the unsuccessful party has the capacity to meet such a liability, a factor to which weight can be given, per Hamod at [816]-[817].
Further, applying Hamod at [818], it is the conduct of the Funder which has caused the dispute with the plaintiffs which became the subject of the application and unnecessarily contributed to the incurring of costs by the plaintiffs. The Funder made a claim to funds in the Ironbridge trust account and demanded that those funds be paid to it. I have found that the plaintiffs were duty-bound to make the application to resolve the dispute. The outcome is that the plaintiffs appropriately incurred costs which were disproportionate to the result of the application, that result being my finding that the Funder had no entitlement to the funds in the Ironbridge trust account except for any surplus funds remaining in the trust account after the purpose for which those funds are held for the benefit of the plaintiffs has been completed, which will only occur when all legal fees, disbursements and costs incurred by Ironbridge are satisfied (Principal Judgment at [204]-[205]).
Applying the tests outlined in Harrison at [22], Hamod at [819]-[820] and Penson at [7], I am confident that on the materials I have been provided I am able to arrive at an appropriate sum using a broad brush approach that is logical, fair and reasonable, based on an informed assessment of the actual costs incurred by the plaintiffs and which does justice between the parties.
I am to determine the gross sum on the indemnity basis that all costs are to be allowed other than those incurred in breach of the plaintiffs' duty as fiduciaries (applying r 42.5(a) of the UCPR). The Funder did not submit that any of the costs were incurred in breach of the plaintiffs' duty as fiduciaries. In my view the plaintiffs are entitled to all of their actual costs of $123,837.95 plus GST (comprising professional fees of $64,195.00 plus GST and disbursements of $59,642.95 plus GST as calculated above), together with the reasonable estimate of their costs in relation to this costs application of $10,770.00, providing a total amount of $134,607.95 plus GST.
In my opinion, applying Hamod at [814] and Ahern at [18], it is not appropriate to apply any discount to this amount because I consider that the plaintiffs have provided accurate and reliable costs evidence in a careful and considered way. In this regard: 1. I consider all of the hourly rates charged by Ironbridge for the work undertaken by them to be appropriate and reasonable for solicitors and paralegals of the requisite experience. 2. I consider that the work indicated in the 14 September invoice as referable to the plaintiffs' application to be reasonably undertaken and reasonable in amount. 3. I consider the split of the majority of the work undertaken by Mr Khan as an Associate and Mr Withane as a Partner to be reasonable. 4. I consider all of the disbursements to have been reasonably incurred and reasonable in amount, including the fees charged by counsel in circumstances where Jonathon Redwood SC was briefed in the proceedings and David McLure SC took over from him when Jonathon Redwood SC was unable to appear at the hearing. I accept the plaintiffs' evidence on the reasons why it became necessary to brief senior counsel in this way, with David McClure SC assisting with reviewing evidence, preparing submissions and appearing at the hearing of the application and Jonathon Redwood SC providing input in relation to the arguments and submissions, given his background of being briefed in the proceedings more generally.
As a result, I consider that the plaintiffs are entitled to a gross sum costs order calculated on an indemnity basis in the amount of $134,607.95 plus GST.

[27]

Legal principles - costs payable forthwith

Rule 42.7 of the UCPR provides that: (1) Unless the court orders otherwise, the costs of any application or other step in any proceedings, including - (a) costs that are reserved, and (b) costs in respect of any such application or step in respect of which no order as to costs is made, are to be paid and otherwise dealt with in the same way as the general costs of the proceedings. (2) Unless the court orders otherwise, costs referred to in subrule (1) do not become payable until the conclusion of the proceedings.
The effect of the costs discretion in s 98 of the CPA - to be exercised at any stage of the proceedings, and read subject to rr 42.1 and 42.7 of the UCPR - is that an order for the costs of any application is based on the practical result of the application and costs do not become payable until the conclusion of the proceedings, unless there are discretionary factors that require some other order.
There are numerous discretionary factors which might give rise to an order for the costs of an application to be payable forthwith.
In Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1; [2002] NSWSC 432, Barrett J at [10]-[13] said: [10] It becomes necessary now to consider the factors which have caused courts to depart from the normal rule in Pt 52A, r 9(1) that costs are payable at the conclusion of the proceedings. A convenient and useful starting point is the following passage in the judgment of Priestley JA in Horrobin v Australia & New Zealand Banking Group Ltd (Court of Appeal, 6 June 1997, unreported) at 9: "None of the cases is on all fours with the present one; indeed, a reading of them emphasises the need for cases to be considered by reference to their own particular facts. Nevertheless, those relied on by counsel for H and S show there is a tendency for costs orders to be made payable forthwith and without waiting for the conclusion of further proceedings when the proceedings in respect of which the costs orders have been made are regarded as sufficiently self contained and detached or detachable from proceedings yet to be heard, whether between the same or associated parties, as to make it seem just for an actual payment to be made in the meantime." [11] This identifies the first recognisable category of case, namely, where the application or aspect in respect of which the particular costs order is made before conclusion of the proceedings represents the determination of a separately identifiable matter or may be viewed as the completion of a discrete aspect. Examples of this may be found in Charlie Brown Pty Ltd v Green (McLelland CJ in Eq, 3 July 1995, unreported) and Bagley v Pinebelt Pty Ltd [2000] NSWSC 830. [12] A second factor which may incline the court to order that costs be payable forthwith is some unreasonable conduct on the part of the party against whom costs have been ordered. That was a factor taken into account by Simpson J in Gattellari v Meagher [1999] NSWSC 1279, although, in the end, her Honour did not think that the particular conduct warranted such an order. [13] A third factor is, as it was put by Giles J in Doran Constructions Pty Ltd v University of Newcastle (Giles J, 16 December 1994, unreported) at 21, that "there was much to come in the proceedings" and "one can see a fairly long time before the proceedings are disposed of". In Horrobin, the decision of Priestley JA to order that costs be payable forthwith was influenced to some extent by the fact that the controversy between the parties would run for at least a further year. In Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (Federal Court of Australia, Lindgren J, 18 August 1995), Lindgren J said that it may be appropriate for greater use to be made of the analogous provision in the Federal Court Rules 1979 (Cth), "particularly in cases such as this one where the final determination of the proceedings is so far away".
In Bowman v Datalec Services Pty Ltd & Ichor Constructions Pty Ltd [2021] NSWSC 1360, Bellew J at [79] helpfully summarised the general principles regarding the discretion under r 42.7 of the UCPR to order costs payable forthwith in the following way (footnotes omitted): In considering whether I should exercise my discretion to "order otherwise" under r 42.7(2) of the rules, I respectfully agree with the view expressed by Katzmann J (in the context of O 62 r 3 of the Federal Court Rules 2011 (Cth)) in Power Infrastructure Pty Ltd v Downer EDI Engineering Power Pty Ltd (No 2), namely that because the facts of the cases necessarily differ, hard and fast rules governing the exercise of such discretion cannot be laid down. That said, a number of general principles which inform the exercise of the discretion can be distilled from the authorities. They include the following: (1) the general principle is that issues of costs should be resolved when the proceedings are concluded, and the rights of the parties have been finally determined; (2) that general principle will usually serve the interests of justice because it will avoid multiple cost assessments and possible unfairness, and will limit the risk of interlocutory proceedings being used to exhaust the financial resources of one of the parties; (3) it follows that an order that costs be paid forthwith is an exception which will only be made in a case that is out of the ordinary. This is because such an order has the capacity to stultify proceedings, particularly those brought by persons with limited resources, and because such an order carries a risk of operating unfairly where, over the course of the proceedings, there may be orders made that one party should pay the costs of the other from time to time; (4) that said, a provision such as r. 42.7(2) of the rules clearly contemplates that there may be circumstances in which a departure from the general principle is warranted. Such a departure may be justified in a case where costs have been incurred following an interlocutory application which is incompetent or misconceived and which, on a proper analysis, should never have been brought; (5) a departure from the general principle may also be justified if there is an element of unreasonableness in the conduct of the unsuccessful party, and it is likely that there will be a long delay between the interlocutory proceedings and the conclusion of the principal proceedings; and (6) other factors which may be relevant to considering whether a departure from the general rule is justified will include whether the costs order on the interlocutory application was relevant to a discrete and separately identifiable aspect of the proceedings, and whether any costs liability is likely to be affected by the final outcome of the proceedings[.]
In Pavlovic v Universal Music Australia Pty Ltd (No 2) [2016] NSWCA 31, Bathurst CJ, Beazley P and Meagher JA considered that it is not essential for all three factors outlined by Barrett J in Morningstar to be satisfied to determine that costs should be payable forthwith, stating at [23]-[24]: [23] We consider that granting the orders sought by the appellants accords with the dictates of justice. As was held by Hodgson JA in Richards v Kadian [2005] NSWCA 373 at [7], the question as to whether costs should be payable forthwith is "one of time of enforcement" rather than a determination as against whom or for what amount a costs order should be made. It necessitates a consideration of practical impediments to justice. This includes, in this case, keeping a party out of costs of a finally determined aspect of the claim for a considerable period of time. … [24] In the Court's opinion, the interests of justice are such that it is appropriate in all the circumstances that the Court make the orders now sought. In coming to this decision, the Court has not found any unreasonable conduct on the part of Universal, being one of the factors that may be relevant on such an application: Fiduciary v Morningstar Research. However, no such finding is necessary; it is not essential that all three factors outlined in Fiduciary v Morningstar Research be satisfied for the favourable exercise of the discretion to determine that costs should be payable forthwith.

[30]

Consideration

I am satisfied that this is an appropriate case in which I should make an order that costs be payable forthwith for the following reasons.
Applying Morningstar at [11], the application was a matter separately identifiable from the rest of the proceedings and involved the Funder, who was made a party to the proceedings only for the purpose of determining the application. The determination of the application against the Funder on the basis set out in the Principal Judgment has now brought the discrete and self-contained matters in the application to an end.
Applying Morningstar at [13], it is clear to me that the final hearing of these proceedings will not be held for at least another year given that the evidence of the plaintiffs and defendant has not been filed or served and opt-out notices have not been issued to the group members. The plaintiffs no longer have any dispute with the Funder and the justice of the circumstances require that the plaintiffs not have to wait until their substantive dispute with TfNSW in the proceedings is determined at some distant time before they can recover their costs of the application.
In relation to Morningstar at [12], I am not satisfied that on the whole the Funder behaved unreasonably in relation to the plaintiffs' application, notwithstanding my finding above that the Funder's withdrawn attempt to adduce privileged material was unreasonable.
Applying Pavlovic at [24], it is not essential that all three Morningstar factors need to be made out to exercise the discretion to order that costs be payable forthwith. I am satisfied that if I do not make an order that the costs of the plaintiffs' application be payable forthwith, the plaintiffs will be kept from their costs of a finally determined aspect of the proceedings for a considerable period of time.
Further, I agree with the plaintiffs that the trust fund has been substantially exhausted by the plaintiffs being compelled to bring the application and until the costs of the application are paid and the fund is replenished, it will be difficult for the plaintiffs to take the necessary steps they consider are in the interests of group members to progress the proceedings.
Balancing all of these factors, I consider that I should depart from the default position in r 42.7 of the UCPR, with the result that the costs of the plaintiffs' application are to be payable forthwith.

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