SAB Closed 1 Pty Ltd v Bees & Honey Pty Ltd; Bees & Honey Pty Ltd v SAB Closed 1 Pty Ltd

SAB Closed 1 Pty Ltd v Bees & Honey Pty Ltd; Bees & Honey Pty Ltd v SAB Closed 1 Pty Ltd - [2015] NSWSC 1162 - NSWSC 2015 case summary — Zoe

[4]

Gross sum costs order?

The defendant seeks a gross sum costs order under s 98(4)(c) of the Civil Procedure Act 2005 (NSW). I am not prepared to make any such order. The power in s 98(4)(c) may 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 at [22]; see further Hamod v State of New South Wales [2011] NSWCA 375 at [813] and Colquhoun v District Court of New South Wales (No 2) [2015] NSWCA 54 at [6].
In this case, leaving aside any other reasons why a gross sum costs order should not be made, the material adduced as to the quantum of the costs sought is not sufficient to warrant the making of the order.
Here, the evidence of the costs incurred by the defendant is an affidavit sworn by the defendant's solicitor on the record, Mr Eric Shmilovits. There was not, as would usually be required, objective arm's length evidence from a costs assessor (for example see Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2011] NSWSC 11 at [26] per Barrett J). Mr Shmilovits does no more than annex to his affidavit the short form tax invoices of his firm, SLG Lawyers, addressed to the defendant. Those invoices contain no adequate detail of the work done, no statement of the hours worked, and no statement of the hourly rate charged. The invoices refer to the quantum of counsel's fees incurred but do not provide any details of those fees.
Mr Shmilovits also annexed a letter from his predecessor, KWS Legal, addressed to the defendant, which contains statements as to the amounts of invoices and counsels fees incurred by that firm. The actual invoices and counsels fees are not in evidence. It is clear from KWS Legal's letter that some of the work for which that firm charged related to advising the defendant concerning the Agreement itself, rather than work done in the course of this litigation. The fee notes from counsel referred to in the letter include one for counsel who, according to the Court's records, has not appeared in these proceedings.
Further, the amount sought in the gross sum order is $120,000; only $2,634 less than the total of all Mr Shmilovits's fee notes and those of KWS Legal. The adoption of that figure would have the effect of an order more generous to the defendant than an indemnity costs order. Mr Blank, who appeared for the defendant, suggested that I could "discount" that figure as appropriate. But that is not my function. It was for the defendant to propose a reasonable figure, properly supported by appropriate evidence.
For those reasons, I will not make a gross sum costs order.

[5]

Costs incurred in respect of Mr Shields

The plaintiff seeks a special order in respect of the costs it incurred in arranging for Mr Philip Shields, who resides in France, to travel to Australia to give evidence. At the relevant time, Mr Shields was the executive director of the plaintiff's parent company, Sumo Group Australia Pty Ltd. The costs incurred in arranging for Mr Shields to travel to Australia were $7,293.61.
On 29 June 2015, the plaintiff's solicitors sent an email to the defendant's solicitors asking which of the plaintiff's witnesses would be required for cross-examination. The email pointed out that Mr Shields lived in Paris and would have to travel to Australia for the hearing. On 1 July 2015, the defendant's solicitors responded stating that all witnesses that the plaintiff wished to call were required to attend for cross-examination.
Mr Shields travelled to Australia for the hearing. In the course of the hearing, the defendant's counsel informed the plaintiff's counsel that Mr Shields was no longer required for cross-examination.
Mr Shields's affidavit was sworn on 3 June 2015. In large part Mr Shields simply annexed documents to his affidavit. Otherwise, his evidence was not challenged by any evidence adduced on behalf of the defendant. On the face of it, his evidence was uncontroversial. In those circumstances, it was incumbent on the defendant's legal advisers to give close attention to the need to cause Mr Shields to travel across the globe to attend for cross-examination. It was, in my opinion, unsatisfactory and unreasonable for those advisers to postpone the decision until Mr Shields had arrived.
Mr Blank submitted that because of "the urgent nature of the proceedings and its fast tracking in the Commercial List, the defendant had very little time to conduct an in depth forensic analysis of the evidence". I do not accept that submission. It is true that the case was brought on for hearing quickly; a little over two months after commencement. However, as I have said, Mr Shields's affidavit was sworn on 3 June 2015 and I infer served shortly after that. And despite the fact that the case took four hearing days before me, the issues arising in it were not, properly analysed, complex.
Certainly, the question of the significance of Mr Shields's evidence, and thus the question of whether he should be required to travel to Australia for cross-examination, was one that could easily have been made in advance of the hearing. Counsel who practice in this list are expected to apply their skills and experience, and if necessary conduct such "in depth forensic analysis of the evidence" to accommodate the "fast tracking" that this list offers commercial parties.
Mr Blank pointed out, however, that it was open to the plaintiff to suggest that Mr Shields's evidence be taken by audio-visual link. Mr Blank submitted that it was likely that the defendant would have consented to such a course. Mr Blank pointed to the fact that the defendant did consent to the evidence of Ms Leigh Dunn, who lives in Melbourne, being given by telephone (although ultimately she too was not required for cross-examination). Of course, it was also open to the defendant to suggest Mr Shields's evidence be taken by audio-visual link.
In that regard, Mr Hyde, who appeared for the plaintiff, drew my attention to a decision of McDougall J in Walker Charlotte Street v Rio Tinto Services [2014] NSWSC 535. Mr Hyde did not have a copy of that decision in Court during argument yesterday. I have now read that decision and do not see his Honour's observations as seeking to lay down any principles governing applications for leave to adduce evidence by audio-visual link. Rather, on the facts of that case, his Honour concluded that leave should not be granted because the witness in question was "of some significance" whose credit was in issue and whose cross-examination was likely to "range over many topics and involve there being put to him numerous documents" (at [12] and [13]).
Those factors often suggest that the taking of evidence by audio-visual link is not appropriate. I do not understand that any of those factors are at play in this case. It appears to me very likely that in this case the Court would have made an order for cross-examination by audio-visual link no matter what attitude the defendant took.
Had an order for evidence by audio-visual link been made, some costs would of course have been incurred, and thus thrown away, by the defendant's last minute decision not to cross-examine Mr Shields. Mr Hyde submitted that the cost of audio-visual evidence taken in Sydney from Paris or London was still less than the cost of a business class airfare from Europe to Australia. However, there is no evidence that this is so.
What is clear is that, in circumstances where neither side suggested an alternative, Mr Shields travelled to Australia unnecessarily. The defendant's legal advisers should, in my opinion, have given more thought to the need for cross-examining Mr Shields before he departed France. The defendant should pay the costs thereby thrown away.
I therefore make the following orders to finalise the proceedings: 1. The summons and cross-summons are dismissed. 2. I order that the plaintiff pay 80 per cent of the defendant's costs less $7,293.61.

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