Royal Australian Naval Reserve Rifle Club Inc v New South Wales Rifle Association Inc

Royal Australian Naval Reserve Rifle Club Inc v New South Wales Rifle Association Inc - [2010] NSWSC 351 - NSWSC 2010 case summary — Zoe

[20]

23 Principles which inform the exercise of the discretion to award a specified gross sum were considered in Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 by Einstein J and are stated in the headnote as follows: "(1) The purpose of the jurisdiction to award costs as a gross sum is to avoid the expense, delay and aggravation involved in protracted litigation arising from the taxation of costs. A gross sum assessment, by its very nature, does not envisage a process similar to a traditional taxation or assessment. (2) The court must be confident that the approach taken to estimate the claimed costs is logical, fair and reasonable. It must prevent prejudice to the unsuccessful party by overestimating the costs, while at the same time avoiding an injustice to the successful party by applying an arbitrary fail safe discount on the estimate submitted to it. (3) The fairness parameter includes the court having sufficient confidence in arriving at an appropriate sum on the materials available: the gross sum can only be fixed broadly having regard to the information before the court. (4) Nevertheless, the power to award a gross sum must be exercised judicially, by reference to the particular case before the court, and after giving the parties an adequate opportunity to make submissions on the matter. (5) It is not arbitrary exercise of the judicial power for the court to weigh up competing factors and make a determination even if the task cannot be undertaken in a mathematical, precise or formulaic manner. (6) In applying a broad approach to gross sum awards, courts have invariably applied a discount to amounts claimed. (7) The exercise of the power to award gross sum costs should rest with the trial judge, whose familiarity with the proceedings aids in the making of a "logical, fair and reasonable" estimate. (8) The present proceedings were far removed from an ordinary commercial case, involving wide-ranging, complex and fluid issues and a substantial volume of evidence on both sides. Faced with a claim of the size made by the plaintiff (which exceeded the defendant bank's net worth), the defendants were plainly entitled to defend themselves with all the energy and resources at their command. (9) The work carried out on behalf of the defendants, although it involved a "Rolls Royce" approach, was called for in the circumstances of the case. (10) There was sufficient evidence before the court to come to a "logical, fair and reasonable" conclusion. (11) Applying the discount referred to in the authorities, the defendants were entitled to gross sum costs in the amount of $50 million."

[24]

(a) the parties are incorporated under the Associations Incorporation Act 1984 and therefore the security for costs provision in s 1335 of the Corporations Act 2001 does not apply; (b) this is a fight between parties using members' funds; (c) if the plaintiff wants to run this litigation, it is open to it to levy its members; (d) the proceedings were commenced urgently in May 2009 yet the plaintiff did not proceed expeditiously in that it did not file its evidence in reply as required by 2009 directions; (e) there was a substantial delay of three months after Forster J delivered his judgment before the plaintiff raised the costs issues it is now agitating; (f) thereafter the defendant on several occasions sought information from the plaintiff as to the costs orders that it sought but the plaintiff did not respond satisfactorily such that eventually the Registrar made an order on 22 March 2010 that it do so and ordered the plaintiff to the defendant's costs of that hearing; (g) if the matter were to proceed to a costs assessment before a costs assessor, the costs assessment should only take two or three months to conduct; (h) the plaintiff was tardy in complying with the Registrar's directions; (i) all or most interlocutory applications constitute a discrete aspect of the case yet the general rule is that costs do not become payable until the conclusion of the proceedings; (j) if a "forthwith" order where to be made as the plaintiff submits, it should also be made in respect of the costs order in the defendant's favour before the Registrar because they are so closely linked; (k) the evidence of the plaintiff's impecuniosity relied on by the plaintiff stated in Forster J's judgment at [43]-[45] does not cast light on whether the costs of the plaintiff have been deferred by agreement until the end of the proceedings or whether they have been paid; (l) the plaintiff did not disclose notify the defendant that it was relying on its impecuniosity as a factor in the exercise of the discretion until the hearing before me commenced. Accordingly, the defendant has not addressed that issue in evidence although it is content to proceed with the hearing of the plaintiff's motion without adjournment; (m) there is no hard evidence before the Court that the proceedings will be stultified if the orders sought are not made; (n) the defendant cannot necessarily be viewed as well funded; (o) central to the substantive dispute between the parties is the Captain of the plaintiff whom Forster J described in his judgment as "rightly or wrongly…the bete noire so far as [the defendant] is concerned": at [18];

[26]

29 The factors identified by the defendant are cumulatively weighty, notwithstanding they had been answered to some extent by the plaintiff's submissions in reply which I accept. However, on balance, I am persuaded that I should order the defendant to pay the plaintiffs costs ordered by Forster J on 30 September 2009 forthwith. My reasons are that (a) the security for costs application was a discrete and severable part of the proceedings; (b) it appears to be a fairly long time before the proceedings will be disposed of; (c) the evidence referred to at [8] above is sufficient to indicate that the plaintiff is impecunious and it appears that its limited resources have been substantially diverted to contesting the security for costs application on which it succeeded; (d) if the costs to which it is entitled are not payable until the end of the proceedings, there appears to be some risk of delay in progressing the proceedings because of lack of funds although the extent of that risk is unclear on the material before me. However, I propose to order that the costs order made in favour of the defendant by the Registrar also be payable forthwith because it is so closely linked to the costs order in favour of the plaintiff made on 30 September 2009. 30 I am also persuaded that I should make a specified gross sum costs order as sought by the plaintiff. Generally, I think, the decision whether to make such an order should rest with the judge that heard the matter. In the present case that is not possible. However, I have sufficient confidence in arriving at a fair and reasonable conclusion given that the matter agitated before Forster J was straightforward and the plaintiff's itemised solicitor/client costs appear reasonable and are not contested, although they will have to be discounted to arrive at party/party costs. The parties are a rifle club and a rifle association locked in an affiliation dispute. They have been diverted by interlocutory costs issues for the better part of the year since these supposedly urgent proceedings were commenced. Sending the costs off for assessment will only fuel the diversion. The sooner that interlocutory costs issues can be put behind them and the proceedings progressed to trial the better (if the proceedings cannot be resolved by agreement, which the plaintiff told me is the parties' object, if possible). A specified gross sum costs order will facilitate that result.

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Cases Cited (15)

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