Riva NSW Pty Ltd v Mark A Fraser and Christopher P Clancy trading as Fraser Clancy Lawyers

Court of Appeal (NSW)|2018-12-18|Before: Christopher P, Leeming JA, Simpson JA

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Judgment

LEEMING JA: By notice of motion filed on 4 October 2018, although dated 26 September 2018, Mark A Fraser and Christopher P Clancy, who trade as Fraser Clancy Lawyers, seek a variety of special costs orders, as well as an extension of time. The orders sought are as follows: "1. Pursuant to UCPR 98(4)(c) the Court is to assess on a gross sum basis the following costs orders made by this Court in favour of the First Respondent including: (a) The Respondent's costs of the judicial review proceedings filed 6 September 2017; (b) The First Respondent's costs of the Motion filed 19 December 2017 (security of costs) as ordered 22 March 2018; (c) The First Respondent's costs of the Appellant's Motion filed 13 April 2018 (vary orders) as ordered 17 August 2018. (d) The First Respondent's costs of and incidental to this Motion. 2. The Appellant, Riva NSW Pty Ltd, to pay the costs of and incidental to each of the proceedings or applications referred to in paragraph 1 (a)-(d) above on the indemnity basis. 3. Any extension of time required for the filing of this application or the making of any of the above orders be granted by the Court. 4. Any further orders that this Court thinks fit."

Background

It is necessary to say something of the four sets of costs in respect of which gross sum costs orders and indemnity orders are sought. I shall follow the order of Fraser Clancy's motion.

(a) The Judicial Review proceedings

First, the Judicial Review proceedings filed on 6 September 2017 were proceedings brought by Riva seeking judicial review of a decision of the District Court made the previous month. They were the subject of Fraser Clancy's application for security for costs, which was ordered by Simpson JA on 22 March 2018: [2018] NSWCA 53. The proceedings were dismissed following the failure to provide the security ordered within the time provided. Fraser Clancy's notice of motion for security for costs was filed on 19 December 2017. It is not clear what work was done prior to the filing of Fraser Clancy's motion for security; I return to this below.
Fraser Clancy says that its "actual" costs for the Judicial Review proceedings are $37,193. That amount excludes the costs of its successful motion for security, which are the subject of paragraph 1(b) of Fraser Clancy's notice of motion.

(b) Fraser Clancy's motion for security for costs

Secondly, Fraser Clancy's application for security for its costs of the judicial review proceedings was made on 19 December 2017. The motion was determined, favourably to it, on 22 March 2018, with an order that Riva pay the firm's "costs of and incidental to this application for security for costs". It was supported by an affidavit and written submissions. Junior counsel appeared for Fraser Clancy before Simpson JA.
Fraser Clancy says that its "actual" costs of the motion are $46,260.

Thirdly, Riva applied to vary the orders made by Simpson JA, which application came before the Court of Appeal constituted by Gleeson JA, Emmett AJA and me on 17 August 2018: [2018] NSWCA 186. Riva's application was dismissed. The Court made the following orders: "1. The appellant's notice of motion of 13 April 2018 be dismissed with costs. 2. The 2017 Judicial Review Proceedings stand dismissed in accordance with the orders made by Simpson JA on 22 March 2018. 3. No further order made as to costs of the 2017 Judicial Review Proceedings."
The Court addressed the costs of the 2017 Judicial Review proceedings in terms at [34]: "No order has been sought in relation to the costs of the 2017 Judicial Review Proceedings, as distinct from the Security Motion. That is scarcely surprising, since the premise of the application for security for costs was the difficulty or impossibility of enforcing a costs order. In the absence of such an application, the Court will make no order as to the costs of the 2017 Judicial Review Proceedings beyond the order already made by Simpson JA in the Security Motion."
Fraser Clancy now says that its "actual" costs of that application are $52,568.

(d) The costs of the current motion

Fourthly, there is the current notice of motion, which has not as yet even been determined favourably to Fraser Clancy, let alone on a basis that warrants indemnity costs.
Nonetheless, Fraser Clancy estimates its costs of that application, as at 9 November, at $41,776. That figure does not include future costs. Mr Clancy further estimates (para 105) additional costs of one day's preparation from junior counsel ($3,850) and 12 hours of his own time to review Riva's affidavits and submissions and settle a response ($7,260).

Concerns about Fraser Clancy's costs

First, the four dollar figures summarised above are taken directly from Mr Clancy's affidavit sworn on 9 November 2018 (para 77 and annexure "A"). Importantly, the four costs figures referred to above, which add to $177,797, are wholly comprised of costs reflecting time charged by Mr Clancy or solicitors employed by his firm. Despite Mr Clancy deposing to these costs being "actual", they are in fact nothing more than the time which has been costed in the firm's timesheet.
That is to say, the figure of $177,797 does not comprise any costs which, so far as the evidence discloses, have actually been paid by the firm - in respect of funds have been transferred from the firm's account. To the contrary. Fraser Clancy has chosen to represent itself, and has kept a record of the time it says has been incurred in this litigation. The firm's entitlement to be compensated rests on the so-called Chorley exception, described by Mason CJ, Brennan, Deane, Dawson and McHugh JJ in Cachia v Hanes (1994) 179 CLR 403; [1994] HCA 14 as "somewhat anomalous" (at 411) and "limited and questionable" (at 413).
For the purposes of this application, I proceed on the basis that Fraser Clancy is entitled to be treated as if it had paid real money to a separate firm of solicitors which was providing legal services to it. However, I decline to use Mr Clancy's language of "actual" costs for the amounts which have been run up in its timesheets.
Secondly, the overwhelming majority of the firm's costs represent time incurred by Mr Clancy personally, at a rate of $550 per hour (exclusive of GST). Of the total of $161,633.95, Mr Clancy contributes $143,079.75, which is in excess of 88%. A small amount of work has been done by an employed solicitor of 4 years experience, a legal clerk with 40 years' experience and a law clerk with 1½ years experience. It is unusual for such a high proportion of work to be done by a partner.
Thirdly, Fraser Clancy's timesheets do not include GST. Mr Clancy has chosen to add 10% to the costs his firm claims. He explains why in paragraph 58 of his affidavit. That paragraph includes this sentence: "FCL however is not trading and has no GST tax offsets to entitle it to obtain a tax input credit".
"FCL" is defined as "Fraser Clancy (Partnership)". It is far from clear that Fraser Clancy makes a taxable supply to itself when a partner or employed solicitor spends time working on this litigation. It is also unclear to me how on the one hand Fraser Clancy can practise law and provide what it says are hundreds of thousands of dollars of legal services in the firm's defence, and on the other hand say that it is not trading and incurring the usual expenses (including GST) such as electricity, paper and not least counsel's fees. However, because I have concluded that the GST treatment of Fraser Clancy's costs is immaterial to the outcome of this motion, I take the matter no further.
Fourthly, there have also been disbursements, notably for counsel. Counsel's fees are said by Mr Clancy to be $30,581.75, and there are other disbursements in amounts of $1,021, $2,355 and $4,390. Annexure "A" to Mr Clancy's affidavit (where those figures are found) does not allocate counsel's fees between each of the four applications.
Mr Clancy has exhibited counsel's fee notes dated 15 November 2017, 12 December 2017 and 23 October 2018. It may readily be seen that none of those costs are referable to the current motion, and none or virtually none are attributable to the judicial review proceedings (ie excluding the motion for security for costs). Even the entries in later 2017 mostly appear to relate to security for costs. Counsel's costs are, predictably, divided between the two short applications in Court, before Simpson JA on 22 March and on review on 9 August.
The other disbursements are identified on p 25 of the time sheet, which is the first document in Mr Clancy's unpaginated (and lengthy) exhibit. The $1,021 represents a filing fee, the cost of transcripts, a car park fee and a bankruptcy register search. An amount of $1,430.40 for photocopying contributes to the $4,390. I cannot fully reconcile the remaining disbursements. However, under a heading "Include on Account?" is an entry "Telephone, postage & sundries - 2% of our fees", and there follows amounts of $2,960 and $296 GST. There is another row with a very similar description, although this time it is said that the "2.00% of our fees" is $3,232.68 and $323.27 GST. Since that entry is based upon a percentage of Fraser Clancy's entire billed time, it is difficult to see how the additional amount of $2,960 is derived.
The explanation for the entries may be that Mr Clancy says, in paragraphs 82-83, that he has reduced the 2% surcharge somewhat. He says that he has claimed 1% on the ordinary basis and 2% on the indemnity basis.
Assuming that is so, the firm's costing for this matter includes thousands of dollars which are no more than a moderately arbitrary percentage surcharge on its fees. I see no reason why there should be a 1% or 2% (which, in the case of Mr Clancy's rates translates to an additional more than $5 or $10 per hour) for unspecified expenses connected with the litigation which are too small economically to record. It is one thing to establish a case for a surcharge in the case of a particular firm; it is another to say that since one firm (whose structure may be quite different from that of Fraser Clancy) is able to justify a 1% or 2% surcharge for sundry items, Fraser Clancy is entitled to claim the same surcharge in an assessment or a claim for a gross-sum costs order.
Fifthly, there is no independent evidence of what would be the outcome on assessment of all of this legal activity. There is, for example, no evidence from a costs assessor who has examined the file and the time records.
Mr Clancy has taken a different approach. He says that he is an experienced solicitor. He says that he is able to say that the work involved "a reasonable level of legal complexity" and that "each motion has involved extensive legal and factual argument" (paras 60 and 64). He says that since Fraser Clancy acted for itself, there were no solicitor client costs. He also says that since its billing is accurate to quarter units of 90 seconds, rather than the more familiar 6 minutes, that is a reason why "only a small reduction, if any, should be made by the Court to our professional costs to allow for any work which the Court may consider exceeds what may be reasonable on a broad-brush gross sum assessment approach" (para 75).
Although Mr Clancy has prepared a very long affidavit, the ultimate methodology is straightforward. He says that given there are no solicitor client costs, 90-95% of the work in the timesheet would be considered reasonable on a party/party costs assessment, and 95-100% would be allowed on an indemnity basis.
Fraser Clancy therefore contends that the costs and disbursements have been $227,365. It seeks a gross sum order in its favour of $217,085-$227,245 if costs are ordered on an indemnity basis, and one in the order of $195,849-$208,034 if an order is made on the ordinary basis.
Prima facie, something has gone badly wrong with the way in which Fraser Clancy maintains it is entitled to costs in its favour. There have been two contested hearings, one for security for costs, one to vary the order for security for costs. The first was completed by 2.45pm; the second was completed before the luncheon adjournment. Neither was especially complex. Riva lost both applications. But I cannot conceive how Fraser Clancy could possibly thereby become entitled to costs in excess of $200,000 from its success. I should make clear immediately that the overwhelming majority of those costs are costs "incurred" by Fraser Clancy; nothing in this judgment is to be read as expressing any view on counsels' fees (which are in the order of one sixth of Fraser Clancy's costs) as being unreasonable.
Costs should be proportionate to the importance and complexity of the subject-matter in dispute: Civil Procedure Act, s 60. Gleeson JA said that "the entitlement of parties to justice is not unconditional and must have regard to a number of factors, including the proportionality of the costs involved to the amount in dispute": Council of the City of Botany Bay v Michos [2013] NSWCA 244 at [31], in a passage endorsed in Zepinic v Chateau Constructions (Aust) Ltd (No 2) [2014] NSWCA 99 at [33]. It is especially concerning that in this case (as in Zepinic v Chateau Constructions) that so much time could be said to have been spent by Fraser Clancy on an application to improve Fraser Clancy's costs entitlement.
Riva submits that: "The quantum of costs claimed by the First Respondents is enormous and raises more than a suspicion that they are out of proportion to what might reasonably be incurred in the just determination of the matters in dispute. ... The large amount of irrelevant material or otherwise inadmissible material in the Clancy affidavit bears eloquent testimony to unreasonable and wasted time and effort."
In response, Fraser Clancy contends that, in the absence of any evidence or even submission as to any unreasonableness of any particular item of work, "this Court should reject outright Riva's submissions". The firm says that "[t]he costs are not enormous and they are proportionate to the work required to rebuff Riva's Motion to vary and the appeal and to pursue a security of costs order as well as the large amount of work which FCL was required to do at Riva's request and so this Court was not embarrassed by absence of documents on Riva's Motions" (reply submissions, paragraph 29).
It is as well to reiterate what was said in Zepinic at [36]: "A client may choose to request and obtain more legal services than those necessary efficiently to dispose of litigation. However, for the purposes of the application, it is necessary to bear in mind what Barton J long ago said in Donohoe v Britz (No 2) (1904) 1 CLR 662 at 666: 'It is a general rule that, as between party and party, the luxuries of litigation must be paid for by those who indulge in them, the necessaries only are to be paid for by the losing side.' To the same effect, Barwick CJ said in Stanley v Phillips (1966) 115 CLR 470 at 478: 'The emphasis throughout is upon obtaining an adequate presentation to enable justice to be done: it is not upon the propriety of the steps taken by a litigant to ensure the maximum of success in his own cause. That of course he may do but not, in my opinion, at his opponent's expense.'
I find it very hard to reconcile the time recorded in Fraser Clancy's timesheets with what was reasonably necessary for the litigation. I say that fully bearing in mind that it can be difficult when responding to a determined litigant such as Riva and those who control it. I do not consider that all of the excess that has occurred in the litigation between these parties has been the fault of Riva. One small matter is suggestive: Fraser Clancy's written submissions in reply (signed by, and I would infer from their style also drafted by, Mr Clancy) occupy 41 paragraphs over 10 pages excluding annexures. They purport to be in reply to Riva's submissions of 17 paragraphs over 4 pages. Reply submissions should seldom exceed the length of the submissions to which they are made in reply. Fraser Clancy's reply submissions are 2 ½ times as long.
However, in light of the timing of Fraser Clancy's application and the limitations on this Court's jurisdiction to accede to it, it is not necessary to resolve the dispute as to quantum.

Jurisdiction

The favourable costs orders obtained by Fraser Clancy were in judgments whose cover sheets included the following prominent note:
Further, the judicial review proceedings were dismissed in April 2018, following non-payment of security, pursuant to the automatic operation of the order sought and obtained by Fraser Clancy.
Fraser Clancy's notice of motion was only filed on 4 October 2018. That is more than seven months after the 22 March 2018 order for costs, more than six months after the judicial review proceedings were dismissed, and some seven weeks after the notice of motion seeking review of Simpson JA's orders was dismissed with costs.
UCPR r 36.16, consistently with the note on judgments published by this Court, provides as follows: "36.16 Further power to set aside or vary judgment or order (1) The court may set aside or vary a judgment or order if notice of motion for the setting aside or variation is filed before entry of the judgment or order. (2) The court may set aside or vary a judgment or order after it has been entered if: (a) it is a default judgment (other than a default judgment given in open court), or (b) it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order, or (c) in the case of proceedings for possession of land, it has been given or made in the absence of a person whom the court has ordered to be added as a defendant, whether or not the absent person had notice of the relevant hearing or of the application for the judgment or order. (3) In addition to its powers under subrules (1) and (2), the court may set aside or vary any judgment or order except so far as it: (a) determines any claim for relief, or determines any question (whether of fact or law or both) arising on any claim for relief, or (b) dismisses proceedings, or dismisses proceedings so far as concerns the whole or any part of any claim for relief. (3A) If notice of motion for the setting aside or variation of a judgment or order is filed within 14 days after the judgment or order is entered, the court may determine the matter, and (if appropriate) set aside or vary the judgment or order under subrule (1), as if the judgment or order had not been entered. (3B) Within 14 days after a judgment or order is entered, the court may of its own motion set aside or vary the judgment or order as if the judgment or order had not been entered. (3C) Despite rule 1.12, the court may not extend the time limited by subrule (3A) or (3B). (4) Nothing in this rule affects any other power of the court to set aside or vary a judgment or order."

Parties' submissions

Prayer three of Fraser Clancy's notice of motion seeks an extension of time. Although Fraser Clancy's submissions in support of the various orders sought by it occupy 30 pages (and 128 paragraphs) together with a 15 page (and 78 paragraph) chronology, very little is said about the extension for time. Paragraphs 124 and 125 are in fact the only paragraphs which address the extension which is sought. After asserting that Riva should have consented to pay Fraser Clancy's costs of the judicial review proceedings, and to pay gross sum costs orders of each of the four applications in its motion, the submission goes on to claim: "Riva should also have consented to any extension of time for the filing of this application be granted and Riva should have consented to paying costs on an indemnity basis in the circumstances".
In paragraph 125, Fraser Clancy refer to letters written by it to Riva on 24 and 27 August 2018 requesting its consent to one or more of the orders sought on the motion, to which Riva did not respond.
In Fraser Clancy's chronology, once again there is only a single entry relating to the extension of time. It is said that "On 20 August 2018, FCL requested this Court list FCL's Amended Motion seeking a gross sum costs order and indemnity costs for hearing".
Riva opposed any extension of time. It submitted: "So far as the present application concerns the costs orders made by Simpson JA on 22 March 2018 and by the Court on 17 August 2018 the present application is made well outside the 14 day window permitted by UCPR r.36.3A. No evidence has been provided in the Clancy affidavit, nor reasons provided in the First Respondent's submissions, why that 14 day period should be extended. The delay in bringing this application is very substantial and should not be countenanced by the Court. Accordingly, it is submitted the present application should be confined to the substantive judicial review application where there has been no hearing on the merits and no costs order made."
In reply, Fraser Clancy stated that it first wrote to the Court seeking separate orders in relation to costs on 6 April 2018. That submission annexed a letter dated 6 April 2018. The submission continued: "Thus, the Respondent had put the Court on notice at the earliest opportunity that it would be seeking indemnity costs and gross sum assessment. As it turned out, Riva then filed out of time, its Motion to vary and the issue of costs was left in abeyance. On 29 August 2018 following the Court's judgment, this firm wrote to Registrar Riznyczok renewing the Motion for costs. At that stage, the Respondent was prepared to accept its costs be paid on the ordinary basis."
The letter of 29 August was also attached to the submissions in reply.

Application

As will be seen below, Fraser Clancy appears to be under the misapprehension that an application to vary an existing order, or to apply for a further order, may be made by letter to the Registrar, copied to the solicitor for the other side. That is not so.
UCPR r 18.2 is as follows: "18.2 Requirement for notice (cf SCR Part 19, rule 2; DCR Part 16, rule 2; LCR Part 15, rule 2) (1) A person may not move the court to make any order unless notice of motion has been filed and served on each person affected by the proposed order. (2) Despite subrule (1), a person may move the court to make an order without notice of motion having been filed or served on a person if: (a) that person consents to the making of the order, or (b) the preparation, filing or service of the notice would cause undue delay or other prejudice to the person by whom the order is sought, or (c) the court dispenses with the requirement for such notice to be filed or served, or (d) under these rules or the practice of the court, the motion may be made without the prior filing or service (as the case may be) of notice of motion."
None of the exceptions is applicable. It follows that no application has been made within the time mandated by r 36.16 to vary the costs orders made on 22 March or 17 August 2018. The position is not dissimilar to what was held in Aukuso v Tahan [No 2] [2018] NSWCA 302 at [20]-[23], rejecting the proposition that emails to the Registrar constituted substantial compliance with r 36.16. As Simpson AJA said at [22], referring to r 36.16, "[t]hat subrule is specific in requiring a notice of motion; an email is not substantial compliance with such a requirement." I return to this below, because it is dispositive of paragraphs 1(b) and (c) of the notice of motion. However, in light of the fact that Fraser Clancy appears to have a different view, it is as well to summarise what occurred.

Court correspondence falling short of an application by way of notice of motion

Fraser Clancy's letter dated 6 April 2018 was in the following terms: "We act in the interests of the Respondent to this Judicial Review application. We note that the matter is listed for mention on 23 April 2018. We refer to your email dated 22 March 2018 and request that the mention date not be vacated even if the proceedings are dismissed pursuant to the orders of Simpson JA The reason for this request is that whether or not the proceedings are dismissed, we wish to seek orders in relation to the costs of the Motion and if the proceedings are dismissed we wish to seek further orders in relation to costs of the appeal proceedings generally and the assessment of those costs by the Court. In this case we would seek an order listing the matter on 23 April 2018 for directions as to the argument as to costs of the Motion determined on 22 March 2018 by Her Honour Simpson JA as well as the appeal proceedings generally as indicated above."
That letter did not apply for costs, even informally. It advised of a "wish" to seek orders in relation to the costs of the motion. More importantly, and in any event, no further steps were taken in relation to vary the costs order made by Simpson JA for more than six months. True it is that in the meantime Riva was itself seeking to vary the substantive order made by Simpson JA. However, I do not see that that fact entitled Fraser Clancy to defer making its application until October, to vary an order made in its favour on 22 March 2018. So far as the evidence discloses, Fraser Clancy left the matter in abeyance for the following four months.
In particular, not lightly would I accede to any proposition that a party may write a letter to the Registrar within 14 days of making an order flagging an intention to vary it, and then renew that application many months later, at a time convenient to it, disregarding the time limits for variation of orders and the fundamental principle of finality.
I do not understand the reference in Fraser Clancy's chronology to 20 August 2018 (it may be a typographical error for 29 August, which date does not otherwise appear). Fraser Clancy's letters of 24 and 27 August take the matter no further than its letter of 29 August 2018 to the Registrar, which was as follows: "We refer to that Motion and the determination of that Motion by the Court of Appeal on 17 August 2018. We note that the Court dismissed both the Motion and the proceedings generally. We also refer to our letter dater dated 6 April 2018, a copy of which we enclose for your reference. In that letter we requested that the proceedings be relisted for argument as to the costs of the motion as well as to the appeal proceedings generally and that those costs be assessed as a gross sum by the Court Accordingly, the Respondent has complied with UCPR 36.16(3A) which requires that the application for variation of the Court's orders/costs be lodged within fourteen (14) days. We also note that pursuant to UCPR 98(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. On 13 April 2018 Riva NSW Pty Ltd ("Riva") filed a Motion seeking to vary the orders made by Her Honour Simpson JA on 22 March 2018 and subsequently the matter was listed for directions on the Motion and no orders were made by the Court in respect of our application. UCPR 42.20 which is in the following terms: '42.20 (1) If the court makes an order for the dismissal of proceedings, either generally or in relation to a particular cause of action or in relation to the whole or part of any claim, then, unless the court orders otherwise, the plaintiff must pay the defendant's costs of the proceedings to the extent to which they have been dismissed.' Pursuant to UCPR 42.20 we submit, the Respondent is entitled to costs of the dismissed proceedings. In the Court's judgment dated 17 August 1018 at paragraph 34, it states: 'No order has been sought in relation to the costs of the 2017 judicial review proceedings, as distinct from the security motion. ... In the absence of such an application the Court will make no order as to the costs of the 2017 judicial review proceedings beyond the order already made by Simpson JA in the security motion'. Our letter dated 6 April 2018 is such an application for an order in respect of the judicial review proceedings generally. Our letter was not before the Court on 9 August 2018 as we were defending the Applicants Motion and such orders were being sought by us in respect of the Motion and not the proceedings generally and an order should formally be made. In addition to our letter dated 6 April 2018, out of more abundant caution, the Respondent also relies upon this present letter and the enclosed Motion seeking appropriate orders as an application in regard to the costs of the Judicial Review proceedings. The costs of the appeal proceedings generally are not insignificant noting the appeal proceedings were commenced August 2017 and have been before the Court on various occasions and a Response to the appeal was filed and Submissions in Reply prepared. In our view therefore: 1. The Respondent has made such an application for costs of the 2017 judicial review proceedings generally. 2. In its judgment of 17 August 2018, the Court did not make an order In relation to the costs of the Judicial Review proceedings generally. 3. In any event if we are wrong about (1) above, the Respondent requests the Court also treat this letter as a further application for costs of the judicial review proceedings. 4. The Court can still make an order as to costs of the Judicial Review proceedings pursuant to UCPR 42.20(1) and/or s98(3). The Respondent requests that the proceedings be relisted for the Court to consider the Respondent's application and to make directions inin [sic] relation to the application for costs including indemnity costs. We look forward to the Registrar's reply to this request to relist the matter before the Registrar for an application to be made for the Applicant/Riva to pay the Respondent's costs of and incidental to the judicial review proceedings generally as well as for the costs of the above to be determined by the Court on a gross sum basis."
Contrary to the second paragraph of that letter, there has not been compliance with UCPR r 36.16(3A). Applications are to be made by notice of motion, save in the circumstances specified in r 18.2.
Further, notwithstanding that the letter said that it enclosed a notice of motion, seemingly it did not do so.
The matter received the attention of the Registrar on 31 August 2018 (perhaps only electronically; the evidence as to this is not clear), who ordered: "The time under UCPR 36.16(3A) in respect of orders made on 17 August 2018 is extended until 7 September 2018."
Two things should be noted about that order. First, the extension did not purport to apply to any application which might be made to vary the costs order made on 22 March 2018. Secondly, and in any event, despite seeking extra time and being given until 7 September 2018, Fraser Clancy still made no application within the extended time ordered by the Registrar.
By letter dated 26 September 2018, Fraser Clancy wrote once again to the Registrar: "We refer to our letter dated 29 August 2018 and the orders made by the Registrar on 31 August 2018 extending time for filing the Motion under UCPR 36.16(3A) attached to our letter until 7 September 2018. S98(34) of the Civil Procedure Act ("CPA") provides that 'An order as to costs may be made by the Court at any stage of the proceedings or after the conclusion of the proceedings." Due to an oversight on the part of the writer and illness to the writer's assistant, the Motion was not filed in accordance with the Court's directions. We enclose a copy of the proposed Motion for the Registrar's reference that we intend to file, with the Court's leave and the grant of an extension of time for filing. We note that order 1 of the Motion is not seeking to set aside or vary any order but is seeking a new order, namely a gross sum costs assessment under s98(4) CPA and we believe that no extension of time is required for that application. We also note that as yet no order has been made as to the costs of the Appeal proceedings generally and an order for costs from the Court is required and we believe that no extension of time is required for that application. Order 2 of the Motion is also arguably not seeking to set aside or vary the costs orders on 22 March 2018 and 17 August 2018 but rather seeks an additional order, namely that costs be assessed on an indemnity basis. Costs were ordered in favour of the Defendant on both of those occasions. Order 2 seeks an additional order (rather than a variation or setting aside of the costs order). This additional order is that the costs ordered be payable on the indemnity basis. However, lest we are wrong about that, the Defendant seeks a further extension of time to file this Motion. In light of our communications with the Court dated 6 April 2018 and 29 August 2018 (copy enclosed) we humbly request that the time for filing this Motion be extended, if necessary and to the further extent necessary."
It is unclear whether a motion was enclosed with that letter. Fraser Clancy moves on a motion dated 26 September 2018, but only filed on 4 October 2018.
Fraser Clancy thus asserts that no extension of time is needed for the orders that the firm's costs in relation to the 22 March and the 17 August 2018 orders be assessed on a gross sum and on an indemnity basis, and alternatively applies for an extension of time.
The assertion is incorrect, and the application for an extension of time should be refused.

Fraser Clancy's application for gross sum and indemnity costs is an application to set aside or vary the existing costs orders

Fraser Clancy's letter contends that an order for a gross sum costs assessment is "not seeking to set aside or vary any order", but rather "is seeking a new order". I disagree. The extant costs order made on 22 March and 17 August 2018 entitle a party to apply for assessment (ultimately, by filing an application which will come before a costs assessor who will determine, on the ordinary basis, an amount of party/party costs to which the firm is entitled). The order which is sought, namely, that Fraser Clancy's costs be paid on an indemnity basis would, if made, give rise to different rights as between the firm and Riva. The assessment would be determined on a different basis, and would yield a certificate in a different amount. The two orders (namely, that Riva pay Fraser Clancy's costs on an ordinary basis, and on an indemnity basis) are mutually inconsistent. It is quite plain that the application for an indemnity costs order is one to set aside or vary an existing costs order.
Aside from principle, a deal of authority is to the same effect: see for example AT v Commissioner of Police, NSW (No 2) [2010] NSWCA 337. Indeed, many occasions when parties have applied to vary or set aside orders have been cases where special costs orders have been sought.
The same is true, even more clearly, for the application for a gross-sum costs order. Such an order supplants the assessment regime, and permits a person to proceed to execution directly. Plainly that too is an application to set aside or vary an existing costs order.
Both applications are governed by r 36.16.

The extension of time must be refused

No application was made within the 14 days mandated by r 36.16 after the orders on 22 March or 17 August 2018. In response to a request made by Fraser Clancy in August 2018, the firm gained until 7 September 2018 to make its application. However, no application was made within that extended time. Indeed, no application was made by notice of motion, in accordance with UCPR r 18.2, until 4 October 2018.
There is no power under r 36.16 to extend the time so as to permit paragraphs 1(b) and (c) of Fraser Clancy's notice of motion to be made. They must be dismissed.
I note that Riva does not oppose an application being made for costs of the Judicial Review proceedings, which has not been determined on the merits and which was dismissed in April 2018 following the failure to provide security. I shall address this application below.

Absence of any application under s 14

For completeness, I note that no application has been made by Fraser Clancy, either in its notice of motion, or in response to Riva's reliance on r 36.16, to dispense with the rule pursuant to s 14 of the Civil Procedure Act 2005 (NSW). In the circumstances of this application, where so much effort has already seemingly been deployed without attending to what may be regarded as basic elements of practice, I doubt that I should even consider whether it is appropriate to dispense with the requirements of the rules in circumstances where no application has been made to do so. Certainly, if I were minded to accede to it, I would not do so without first hearing from Riva.
However, were I to ask whether it was appropriate to dispense with the rules, I would answer negatively. I think it is sufficient to focus upon the five week period from 31 August 2018 until 4 October 2018. At that time, Fraser Clancy must have known that there was a time limit for making applications to vary or set aside costs orders. Even if no one had read the note on the Court's judgments, the firm had sought and obtained an extension from the Registrar until 7 September 2018. That day came and went. The time sheets show continuing activity from Mr Clancy on 12 September ("draw completely new submissions on costs of the proceedings generally and indemnity costs of the Motion for security and gross sum costs order" - which incidentally is eloquent testimony to the inefficiency of the process adopted within the firm) and later days. There is simply no explanation - save for a sentence in the firm's letter of 26 September 2018 - for why the extended deadline came and went. And even then it took more than another week for the firm to file a notice of motion.
It is to be borne in mind that this is an application for the firm to receive the benefit of a gross sum costs order, in a large amount of money, referable to rates charged for the service of Mr Clancy at $550 per hour exclusive of GST. More would need to be done than include a sentence in a letter saying it was an oversight in order to warrant a dispensation from the rules of Court. I do not consider it is "appropriate" to dispense Fraser Clancy from compliance with rules, even had it made application to do so, in those circumstances.
Finally, anticipating what follows, even if an application had been made under s 14, and even if I had otherwise been minded to acceded to it, the evidence in support of a gross-sum costs order is not such as to persuade me that one should be made. That is for substantially the same reasons as are disclosed in dealing with paragraph 1(a) of Fraser Clancy's notice of motion, to which I now return.

The costs of the Judicial Review proceedings (excluding the security for costs application)

Unlike the orders made on 22 March and 17 August 2018, in this case Fraser Clancy does not seek to vary or set aside any existing costs order. Nor does Riva oppose the application being made. I am satisfied there is power to make orders as to Fraser Clancy's costs of judicial review proceedings brought by Riva insofar as those costs fall outside the extant costs order on Fraser Clancy's notice of motion.
Although the proceedings have not been determined on their merits, costs prima facie follow the event. Riva makes no submission against that course, although it opposes costs on an indemnity basis and on a gross sum basis.

No order for indemnity costs

I am not satisfied that the litigation commenced by Riva, promptly in September 2017 after the dismissal of its application by the District Court the previous month, was an abuse of process. I reach that view for the following reasons. 1. First, with the benefit of the hearing on 10 December 2018, I cannot disregard the concession by counsel for Fraser Clancy that it was reasonably arguable that the District Court had no jurisdiction to make a post-judgment freezing order against a trustee, in circumstances where execution (say, by the appointment of a receiver) cannot be effected by that Court. Indeed, I regard the concession as having been rightly made. 2. Secondly, Fraser Clancy did not apply for the proceedings to be struck out as an abuse of process. To the contrary, that firm's response was to seek security for its costs of defending the litigation on its merits, and in the amount of $70,000. That stance may not be strictly inconsistent with a claim that the application was an abuse of process, but it certainly sits ill with such a claim. 3. Thirdly, I am unpersuaded by Fraser Clancy's submissions to the contrary. These fall into two categories: Fraser Clancy's specific submissions on "why Riva should pay costs of judicial review proceedings generally on an indemnity basis" (paragraphs 80-82) and the firm's "general reasons" (paragraph 27). I address each in turn. 4. The specific submissions highlight the similarity between the application and the proceeding which was summarily dismissed by Emmett JA in October 2014. Fraser Clancy says that a review should have been sought of Emmett JA's decision, rather than fresh proceedings brought, leading to the inference that "Riva pursued this appeal merely to frustrate and delay FCL's enforcement". Fraser Clancy also says that the judicial review application is "inherently inconsistent with Riva's Supreme Court Damages Claim (which impliedly relies upon the District Court having jurisdiction to make the order)". I think the short answer is that the limitations on the power of the District Court to grant post-judgment Mareva relief in relation to the necessarily equitable execution against a trustee were never pointed out to Emmett JA (I note different counsel then appeared for Riva) and if that is so, that tends against there being an abuse. I do not for my part see an inherent inconsistency between an absence of jurisdiction and the making of a claim for damages for an injunction which should not have issued; an order of an inferior court beyond jurisdiction may be a nullity in law (for example, for the purposes of contempt), but it does not follow that it cannot cause harm. Once again, Fraser Clancy's concession that the point is reasonably arguable tells against the inference that Riva's sole or predominant motive was for an improper purpose. 5. Fraser Clancy submits by way of its "general reasons" that Riva's applications were "hopeless and vexatious" (para 27(iv); I disagree, and note the firm's counsel's concession on 10 December to the contrary. Fraser Clancy says that the application was an abuse given the clear wording of UCPR rr 25.11 and 25.14 (para 27(vi)); that is no answer to the difficulty of execution of a judgment against a trustee by the District Court. Fraser Clancy submits that Riva "has acted unconscionably and in contempt of this Court since 2014" and "Riva has also been in contempt of the District Court in refusing to pay its judgments since August 2012 and 20 December 2013"; I disagree, for it is not a contempt to fail to pay a judgment debt. 6. I am conscious that Fraser Clancy points more broadly to statements made by Mr Ferella that he "does not propose to pay FCL" and more serious statements about what is said to have been Riva's contempt in failing to produce documents, that the proceedings commenced by it have occurred in circumstances described as "vexatious" and "involved bad faith". I do not think that I should properly use these findings to lead to an indemnity costs order in respect of separate proceedings, conceded to be reasonably arguable.

No gross sum costs order should be made

However, I should be willing to accede to a gross sum costs order, because the parties to this litigation have shown an unrestrained capacity to engage in dispute, including over minutiae. Section 98(4) of the Civil Procedure Act authorises the Court to make an order to the effect that the party to whom costs are to be paid is to be entitled to "a specified gross sum instead of assessed costs". The principles relevant to the exercise of the Court's discretion were stated by Beazley JA in Hamod v State of New South Wales [2011] NSWCA 375 at [813]-[820]. Presently apposite is her Honour's statement at [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 ..."
The difficulty faced by Fraser Clancy is similar to that identified in Colquhoun v District Court of New South Wales (No 2) [2015] NSWCA 54, where there was a similar lack of evidence. This Court said at [6]-[7]: "The power to make a lump sum costs order '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': Harrison v Schipp [2002] NSWCA 213; 54 NSWLR 738 at [22]; Hamod v State of New South Wales [2011] NSWCA 375 at [813]. The material supplied by the Secretary, which is a bare statement of total costs and disbursements, does not permit the Court to have any confidence that $22,000 (or some other amount) is an appropriate sum. The evidence is completely silent as to (a) the timing and nature of costs incurred, (b) the rates at which lawyers charged, and (c) the amount likely to be recoverable on assessment in the event that that took place. There is substantially less evidentiary material than what was held to be insufficient in Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2011] NSWSC 11. In that decision, Barrett J concluded at [56]: 'Because the material on which NGC relies upon this application is insufficient to ground a well-informed exercise of the discretion to make a gross sum costs order, the court will not make such an order; and this is so despite the matters of complexity of costs assessment and impecuniosity of the plaintiffs liable for costs that would otherwise make such an order appropriate.'"
True it is that the time sheets show the timing of the costs incurred, and the hourly rates which were charged.
However, there is no meaningful evidence as to the amount which would be recoverable on assessment, save that I would conclude that it would be substantially less than the 90%-95% of the total as estimated by Mr Clancy. I say that for these reasons.
First, Mr Clancy accepts, properly, that his statement as to the 90%-95% in his affidavit is no more than a submission (see 14 December 2018 response to objections to affidavit at para 99).
Secondly, there is no expert evidence as to what would, in the facts of this litigation, be recoverable were Fraser Clancy's costs be sent to assessment. Accepting for present purposes that Mr Clancy were able to give the evidence to which he deposes as to the ordinary processes of assessment, I do not regard the facts of this litigation including the costs said to have been incurred as anything like ordinary. In particular, Fraser Clancy was told by its counsel immediately upon receipt of the application that security should be sought. Counsel's first fee note records, in a conference on 18 September 2017, "we need security for costs, collateral attack on previous NSWCA decision". Security for costs applications should almost always be brought promptly. To the extent that a defendant delays doing so, and incurs costs which then fall outside the security obtained, it is far from clear to me that a costs assessor would regard those costs as reasonably incurred. Rather, those costs should have been deferred until the question of security had been resolved.
Thirdly, Mr Clancy is in an intricately conflicted position. He is an expert witness, a principal actor, an advocate and a beneficiary. He seeks to give expert opinion evidence as to the outcome of an assessment of the costs in this litigation. More than 88% of those costs were incurred by him personally. He is the author of the submissions made in support of the application. And all of those costs, so far as the evidence discloses, are merely time records, rather than costs for which a separate client seeks a partial indemnity. In other words, any gross sum costs order made on Mr Clancy's application will not serve to relieve in part the burden of that firm's costs upon its client. It will go directly to the revenue of the firm. Mr Clancy is thus the main actor, a pecuniary beneficiary and the man who has signed the firm's submissions, who also seeks to give the benefit of an expert opinion. I mean no disrespect, but that is not a satisfactory way to adduce probative evidence of the likely outcome of the firm's billings if they went to assessment.
Fourthly, the amounts are too high. Take the costs of the present application for special costs orders. Mr Clancy said that it had cost (up until 9 November 2018), no less than $41,776, to which should be added his estimate of counsel's fees of $3,850 and his own time of $7,260 making a total of $52,886. It is absurd to think that $52,886 could be spent on an application for indemnity costs and gross sum costs orders, where those orders themselves were in the order of $140,000. This is entirely in disregard of the proportionality required to be recognised by s 60 of the Civil Procedure Act.
The primary materials permit some precision in how the $41,776 is calculated (the balance is merely an estimate). The $41,776 represents the time recorded from 27 August 2018 until 8 November 2018 (which is the day preceding the execution of Mr Clancy's affidavit in support of the application for special costs orders) of $37,978.80, to which has been added 10% claimed for GST. Of the $37,978.80, all save $2,767.80 was time incurred by Mr Clancy personally, which is to say some 93% of all time on the application for special costs orders was the time of a partner, as opposed to the time of a more junior solicitor. It is unclear to me how much of the work should reasonably have been done by a more junior solicitor, but it is certainly substantially more than 7%. Further, the time sheets record Mr Clancy as having personally spent some 64 hours working on the application for special costs orders. Fraser Clancy is right to say that Riva has tendered no evidence to the effect that this was excessive or unreasonable. No evidence is required. Sixty-four hours to generate a notice of motion, supporting affidavit and submissions in support of special costs orders is, with respect, absurdly excessive given the nature of the application.
This Court refused a gross-sum costs order in South Western Sydney Local Health District v Gould (No 2) [2018] NSWCA 160. Once again, it did so because there was insufficient information, and, to be fair, Fraser Clancy has adduced considerably more information than occurred in that case. The Court refused the application for $90,000, which was said to reflect "slightly more than 60% of the appellant's actual costs and disbursements incurred at first instance". My view that Fraser Clancy's costs are an order of magnitude too high is reinforced by that medical negligence case. There had been a five day trial, with lay and expert testimony, and a series of substantial submissions after judgment was reserved. The contrast is with two short interlocutory applications.
I am not persuaded that I can soundly exercise the discretion to make a gross sum costs order.

Orders

Accordingly, I would order that Riva pay Fraser Clancy's costs of the judicial review proceedings commenced by Riva on 6 September 2017, noting that the order excludes the costs of Fraser Clancy's notice of motion for security for costs filed 19 December 2017 for which costs were ordered on 22 March 2018. I would not order that those costs be paid on an indemnity basis. I would not alter the orders made on 22 March and 17 August 2018.
It follows that Fraser Clancy has in substance failed on its notice of motion. I do not consider that it should be entitled to its costs of its notice of motion, let alone indemnity costs assessed on a gross-sum basis. However, Fraser Clancy has emerged with a costs order to which it was not previously entitled, which, although it was not opposed by Riva, was not consented to.
In all the circumstances, I think there should be no order as to the costs of the notice of motion filed 4 October 2018.
In reaching that conclusion, I have principally relied upon the time sheets and counsel's tax invoices, to which no objection was made, and paragraph 99 of Mr Clancy's affidavit, which was concededly a submission. I should deal with the parties' objections to that affidavit.
I reject Riva's relevance objection to the time sheets and counsel's tax invoices, and admit the balance of the exhibit subject to relevance. I reject Riva's relevance objections to paragraphs 5, 14, 20-34. I reject paragraphs 6-11. I admit paragraph 14. I reject paragraph 15. I reject Riva's objections to paragraphs 20-34. I accept Riva's submission that paragraphs 35-38 and 41-46 and 48 are no more than submissions. I admit paragraphs 49-55. I treat paragraphs 56 and 57 as submissions. I admit paragraphs 58-64. I treat paragraphs 65-67 and 69 as submissions. I reject paragraph 68. I admit paragraphs 70 and 71 and 73-74. I treat paragraphs 75 and 78-79 as submissions. I reject paragraph 81. I admit paragraphs 82 and 83. I treat paragraphs 84-88 and 89-92 as submissions. I admit paragraphs 94 and 95. I treat paragraphs 97-99 as submissions. I admit paragraph 100. I treat paragraphs 101-103 as submissions. I admit paragraphs 104-106. I treat paragraphs 107 and 109-111 as submissions.
I make the following orders:
Riva pay Fraser Clancy's costs of the judicial review proceedings commenced by Riva on 6 September 2017, noting that this order excludes the costs of Fraser Clancy's notice of motion for security for costs filed 19 December 2017 for which costs were ordered on 22 March 2018.
Otherwise dismiss Fraser Clancy's notice of motion filed 4 October 2018.
The exhibits may be returned.

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: 18 December 2018

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