Solicitors:
Not applicable (Plaintiffs)
Not applicable (First Defendant)
Bridges Lawyers (Second Defendant)
Sparke Helmore Lawyers (Third Defendant)
DLA Piper Australia (Fourth Defendant)
Barry Nilsson Lawyers (Fifth Defendant)
File Number(s): 2021/279779
[2]
Introduction
On 30 May 2022, I published reasons for my decision (Qasim v Mitchell [2022] NSWSC 698 (the principal judgment)) and made the following orders:
"(1) In respect of the first defendant's notice of motion filed on 11 November 2021:
(a) dismiss the proceedings against the first defendant; and
(b) subject to order (6) below, order the plaintiffs to pay the first defendant's costs of the proceedings.
(2) In respect of the second defendant's notice of motion filed on 10 December 2021:
(a) dismiss the proceedings against the second defendant; and
(b) subject to order (6) below, order the plaintiffs to pay the second defendant's costs of the proceedings.
(3) In respect of the third defendant's notice of motion filed on 11 November 2021:
(a) dismiss the proceedings against the third defendant; and
(b) subject to order (6) below, order the plaintiffs to pay the third defendant's costs of the proceedings.
(4) In respect of the fourth defendant's notice of motion filed on 10 December 2021:
(a) remove the fourth defendant as a party to the proceedings; and
(b) subject to order (6) below, order the plaintiffs to pay the fourth defendant's costs of the proceedings.
(5) In respect of the fifth defendant's notice of motion filed on 9 December 2021:
(a) dismiss the proceedings against the fifth defendant; and
(b) subject to order (6) below, order the plaintiffs to pay the fifth defendant's costs of the proceedings.
(6) Any defendant who seeks a costs order other than that the plaintiffs pay her, its or his (as the case may be) costs on the ordinary basis, may apply within seven days for a different order by written application to my Associate together with submissions and evidence in support.
(7) If an application is made under order (6) above, further directions will be made for the determination of costs issues.
(8) Grant liberty to any defendant to apply for an order that costs be paid in a gross sum."
As various parties made applications pursuant to order (6) above, I made directions for the filing of submissions and evidence with a view to the matter being determined on the papers.
Each of the second, fourth and fifth defendants has sought an order that his or her (as the case may be) costs be paid in a gross sum.
The first plaintiff objects to such orders. She has submitted in writing that the costs have to be assessed. She has not, however, provided any reasons in support of her contention that the costs must be assessed. Nor has she responded to the submissions made by any of the applicants, either as to the substance of the order sought or as to quantum.
I note for completeness that on 15 June 2022, the first plaintiff filed a document entitled "consent order" which purported to remove Fred Klein (the second plaintiff) from the proceedings "by consent". However, the minute of order bore only the first plaintiff's signature. Accordingly, the order has not been made because the other parties do not consent to it. Mr Klein, accordingly, remains a party to the proceedings as the second plaintiff.
Before turning to each application, it is convenient to summarise the relevant principles which govern the appropriateness of this Court ordering that costs be paid in a gross sum pursuant to its power to do so under s 98(4)(c) of the Civil Procedure Act 2005 (NSW).
[3]
The applicable principles
The Court of Appeal in Bechara (t/as Bechara and Co) v Bates [2016] NSWCA 294, summarised the relevant principles applicable to the making of a gross sum costs order pursuant to s 98(4)(c) of the Civil Procedure Act as follows:
"[12] The power to award a lump-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 738; [2002] NSWCA 213 at 742-723 [21]-[22]; Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 123.
[13] 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: Hamod v New South Wales [2011] NSWCA 375 at [818] per Beazley JA (Giles and Whealy JJA agreeing).
[14] A 'broad brush' approach is appropriate. To require the same or similar level of detail as in a formal costs assessment would defeat the purpose of the lump sum order: Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR 1; [1999] FCA 673 at 5 [16]; Penson v Titan National Pty Ltd (No 3) [2015] NSWCA 121 at [7].
[15] The courts have typically applied a discount in assessing costs on a gross sum basis: Hamod v New South Wales at [814].
...
[18] The Court is satisfied that the total costs of this litigation will become even more disproportionate if the costs are referred for assessment and a lump-sum costs order is not made. The reasoning in Hamod v New South Wales at [816]-[817] is apposite."
[4]
Consideration
I regard the present case as one which is suited for the award of a gross sum. As I found in the principal judgment, the plaintiffs alleged claims against the first, second, third, fourth and fifth defendants which were not maintainable and which were, accordingly, summarily dismissed in the case of the first, second, third and fifth defendant. The fourth defendant was removed as a party, having been improperly joined. Thus, considerable costs have been expended in this Court in applying for summary dismissal of claims which were not properly based. Only the first defendant appeared on her own behalf; the other defendants were represented by legal representatives. To add the costs of assessment to the costs already incurred would not be in the interests of the parties. Nor would it serve the interests of justice or the orderly administration of justice.
I propose, when addressing the parties' submissions, to adopt a "broad-brush" approach, as required for such an application.
[5]
The application by the second defendant
The second defendant's application for an order that her costs be paid in a gross sum is supported by the affidavit sworn on 6 June 2022 by Philip Parker, the solicitor on the record for the second defendant.
The summons was filed on 28 September 2021. The second defendant filed a notice of motion for summary dismissal on 10 December 2021. Mr Parker deposed that three solicitors worked on the matter: Blake Shaw, a partner; Katie Griffiths, a senior associate; and Nick Shillington. The firm did not brief counsel on the matter. Mr Shaw appeared at the hearing of the motion before me on 27 May 2022. The total fees including GST amounted to $14,441.35 (solicitors fees) and the total disbursements (filing fees, searches etc) amounted to $453.69.
The amount claimed for the purposes of a gross sum order is $11,000 (solicitors' fees) and disbursements of $453.69, being a total of $11,453.69. The discount (inclusive of GST) of the solicitors' fees is of the order of 25%. I regard the hourly rates charged and the spread of work between the practitioners as reasonable. The rates charged by Mr Shaw for what was, in effect, barrister's work, were commensurate, appropriate and reasonable. I regard this discount as sufficient to comply with the general principle that a discount is usually required to take account of the broad-brush nature of the exercise. While costs are usually assessed as a round-number, this is not required. I do not consider it to be just to require the second defendant to discount the disbursements for filing fees and the like, since such figures can be precisely ascertained.
As referred to above, the plaintiffs have not challenged the evidence adduced on behalf of the second defendant.
I am persuaded that it is appropriate in the circumstances of the present case to order the plaintiffs to pay the costs of the second defendant in the gross sum of $11,453.69.
[6]
The application by the fourth defendant
The fourth defendant's application that her costs be paid in a gross sum was supported by the affidavit of James Berg sworn 3 June 2022. Her submission also referred to Mr Berg's affidavit sworn 10 December 2021, which was read in support of the fourth defendant's notice of motion to be removed as a party.
Mr Berg deposed that he, as partner, worked on the matter with Summer Dow, a senior associate, and Charmaine Cheung, a solicitor. I regard their respective charge-out rates as reasonable and reflective of their respective experience in the profession. Mr Berg briefed counsel, Stuart Maybury, to advise and appear on behalf of the fourth defendant. His fees are well within the reasonable range for experienced counsel.
Mr Berg opined, based on his considerable experience as a legal practitioner in New South Wales, that of the total incurred to date, half of the professional fees would be recoverable on party/party assessment (to take account of separate advice given to the insurer on indemnity issues, which would be deducted from the total, and to make allowance for the "broad-brush" approach appropriate for a gross sum costs order), all of the professional fees incurred on the notice of motion would be recoverable and the entirety of Mr Maybury's fees would be recoverable on party/party assessment. Mr Berg opined that $24,727.25 would be recoverable on assessment. This figure does not include the costs of the application for lump sum costs assessment. On this basis, the fourth defendant seeks an order that her costs be paid in the gross sum of $25,000.
I accept Mr Berg's submission that significant costs were incurred by the fourth defendant "in dealing with voluminous and poorly articulated material related to the originating process and notice of motion."
I am satisfied that the sum of $25,000 is reasonable, having regard to the significant discount applied by Mr Berg to the fees initially incurred by the fourth defendant. However, I consider that there should be some further modest discount to take account of the broad brush nature of the process of coming to a gross sum, given that Mr Berg opines that $24,727.25 would be recoverable on assessment. In these circumstances, I propose to fix a gross sum of $22,000.
[7]
Application by the fifth defendant
The fifth defendant sought an order that his costs be paid on an indemnity basis pursuant to Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 42.5 and that his costs be paid in the gross sum of $20,369.40.
UCPR, r 42.5 relevantly provides that if the Court determines that costs are to be paid on an indemnity basis, "all costs (other than those that appear to have been unreasonably incurred or appear to be of an unreasonable amount) are to be allowed."
As appears from the principal judgment at [7] and [13], the connection between Ms Qasim and the fifth defendant was that he, as a director of Acumen Australia Consulting Engineers Pty Ltd, prepared engineering reports concerning the property (as defined in [5] of the principal judgment) in 2006, 2007 and 2010. For the reasons I gave at [44]-[52] of the principal judgment, I accepted the fifth defendant's contention that there was no arguable claim against him.
In her written submissions in support of the application, Ms Cooper-Hackman of counsel, relied on the following passage from Hamod v New South Wales [2002] FCA 424; (2002) 188 ALR 659 at [20] (Gray J, Carr and Goldberg JJ agreeing):
"Indemnity costs are not designed to punish a party for persisting with a case that turns out to fail. They are not awarded as a means of deterring litigants from putting forward arguments that might be attended by uncertainty. Rather, they serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs."
I am persuaded that it was unreasonable for the plaintiffs to have subjected the fifth defendant to the expenditure of costs to defend himself against vague allegations which did not, on any tenable view, expose him to any liability to the plaintiffs. The proceedings were vexatious in that Ms Qasim advanced allegations which subjected the fifth defendant (and others) to the burden of being parties to proceedings when there was no realistic prospect that she could succeed on her substantive claim against him.
I am satisfied, for the reasons advanced by Ms Cooper-Hackman, that the fifth defendant is entitled to indemnity costs.
Given that the fifth defendant also applies for costs in a gross sum, it is necessary to address how the award of indemnity costs ought be made in conformity with the calculation of a gross sum, having regard to the terms of UCPR, r 42.5.
Nicholas Andrew, a principal in the firm of Barry.Nilsson.Lawyers and the solicitor on the record for the fifth defendant deposed, in an affidavit sworn on 6 June 2022, that his firm and the fifth defendant's previous solicitors have incurred a total of $20,369.40 inclusive of GST. The breakdown of this sum is set out in the affidavit. Mr Andrew deposed that he, as principal, Chetan Shukla, special counsel, and Mariella Kapetina, as an associate, performed work for the fifth defendant. Ms Cooper-Hackman appeared for the fifth defendant at the hearing of the fifth defendant's notice of motion for summary dismissal.
I consider the costs and disbursements and the charge-out rates to be reasonable. I am not satisfied that any costs have been unreasonably incurred or appear to be of an unreasonable amount. My only reservation is that, when a gross sum costs order is sought, it is generally in the interests of justice to discount the amount claimed (particularly, as in the present case, where a full indemnity is claimed) to reflect the fact that the costs have not been assessed. For this reason, although the costs will be ordered on an indemnity basis, I propose to discount the figure to $17,000 to take account of the broad-brush nature of the process of coming to a gross sum figure.
[8]
Orders
For the reasons given above, I make the following orders:
1. Order the plaintiffs to pay the second defendant's costs, as ordered in order (2)(b) made on 30 May 2022, in the gross sum of $11,453.69.
2. Order the plaintiffs to pay the fourth defendant's costs, as ordered in order (4)(b) made on 30 May 2022, in the gross sum of $22,000.
3. Vary order (5)(b) made on 30 May 2022 and order the plaintiffs to pay the fifth defendant's costs on an indemnity basis in the gross sum of $17,000.
[9]
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: 13 September 2022