Radiant Alliance Australia Pty Ltd v Divola

The defendant's application for a gross sum costs order pursuant to s 98(4) of the

The defendant has sought a gross sum costs order pursuant to s 98(4) of the Civil Procedure Act 2005 (NSW). The defendant has tendered, in support of that application, material which establishes the rates at which counsel and solicitors agree to provide legal services to the defendant as well as the amounts charged by those legal representatives to the defendant.
The relevant principles that apply to the consideration whether it is appropriate to make a gross sum costs order were set out by Giles JA in Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213, in which his Honour considered the statutory predecessor to s 98(4) of the Civil Procedure Act at [21]-[22]. The Court of Appeal recently reaffirmed the correctness of this approach in the context of an application under s 98(4) of the Civil Procedure Act in Bechara (t/as Bechara & Co) v Bates [2016] NSWCA 294 at [12]-[16]. In that passage the Court confirmed that the power to order a lump sum should only be exercised where the Court considers it can do so fairly between the parties. Their Honours also said that 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. The Court of Appeal emphasised that a broad brush approach is appropriate and that to require the same or a similar level of detail as in a formal costs assessment would defeat the purpose of a lump sum order.
I am satisfied that it is appropriate to make a gross sum costs order in the present case. When proceedings come before this Court on a question of law from the Local Court there is almost necessarily a disparity between the amount claimed and the costs necessarily incurred in raising questions of law before this Court. There is such a disparity in the present case.
Further, I am satisfied on the basis of the chronology which I have set out above, that the plaintiff's conduct has unnecessarily added to the defendant's costs of the proceedings. Had the defendant been aware that the plaintiff would be the subject of a members' resolution to wind it up on 13 June 2017, many of the costs involved in preparing this matter for hearing could have been avoided. As it happened, it was only the diligence and prudence of the defendant's solicitor, Mr Jessop, in conducting an ASIC search on the plaintiff company on 31 July 2017 which resulted in his learning of the winding up and indeed in this Court being informed of that matter by the filing of the affidavit sworn by Mr Jessop on 1 August 2017.
I am conscious of the principles enunciated in Bechara (t/as Bechara & Co) v Bates in working out the appropriate sum for gross sum costs order. I am satisfied that the material adduced in respect of Mr Fowler's fees shows that the sum of $8,250 exclusive of GST is a reasonable sum. Mr Fowler informs me that he was responsible for drafting the detailed and helpful written submissions which have been filed on behalf of the defendant, although they were signed by Mr Coleman SC. Having read these submissions in preparation for the hearing, I am satisfied that the preparation of these submissions required significant reading and analysis, having regard to the two grounds of appeal for which the plaintiff contended. I note that no application has been made in respect of the fees of senior counsel.
On occasions when Mr Fowler was not available to appear at directions hearings, Mr Weaver of counsel appeared on behalf of the defendant. I am satisfied that his fees of $1,347.50 are reasonable. The defendant's solicitors claimed an amount of $7,240.82 for their professional fees. Mr Fowler tendered two detailed documents which set out the charge-out rate, units and time and, with a considerable degree of detail, the work performed by the solicitors in liaising with counsel, dealing with the clients and performing other tasks, including administrative tasks such as photocopying. The charge-out rates and work performed appears to me to be reasonable. However, the making of a gross sum costs order requires a broad brush approach. It is conventional to apply a discount to the fees claimed unless a discount has already been built into the application.
In the circumstances, I consider it to be appropriate to discount the total amount of $17,663.32. I propose to apply a discount which will not be expressed in percentage terms but which will round down the figure claimed to the figure of $15,000, which includes GST.
Accordingly for the reasons set out above, I make the following orders: (1) Dismiss the amended summons filed on 24 March 2017; (2) Order the plaintiff to pay the defendant's costs of the proceedings; (3) In respect of the costs payable pursuant to order (2) above, order the plaintiff pursuant to s 98(4) of the Civil Procedure Act 2005 (NSW) to pay to the defendant the amount of $15,000 (including GST) within 28 days of the date of this order. 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: 03 August 2017

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