Santangelo v Yates Holdings Victoria Pty Ltd

Resolution of the Contest

The plaintiffs originally advanced evidence and submissions in support of their claim in the February 2023 motion for a specified gross sum in the amount of $65,618.94. Based on an affidavit and accompanying matrix of costs of the solicitor for the defendant, Mr Roberts, the defendant submits that after its various objections to the plaintiffs' claim are considered that a gross sum costs order should only be made in the amount of $28,471.62. But upon presentation of the defendant's evidence and after the defendant raised its issues about the plaintiffs claim calculations, the plaintiffs modified their claim to the sum of $55,024.64. Thus, it is necessary ultimately for the Court to deal with this modified claim on behalf of the plaintiffs and briefly to assess the issues, that still divide the parties. Although some wider background to the plaintiff's claim will need to be considered.
The Court's approach here is to consider the remaining points in issue between the parties on this modified claim, subject by subject. Given the Court's jurisdiction to approach the matter in a broad-brush way, it is not necessary for the Court to advance a precise calculation of the result which would consider every detailed money issue. The Court's approach is to address the main issues by subject below.
Allegedly Disproportionate Costs. The defendant contrasts its overall costs for the period the subject of the February 2023 motion and submits that the starting point for assessment is that the plaintiffs' claim for costs is disproportionate. By reference to the plaintiffs' primary evidence the defendant says that for the period in question since the conclusion of the proceedings in the Court of Appeal the plaintiffs claim to have incurred actual costs of $87,597.70 plus GST. In contrast the defendants say that for the same period they have only incurred $16,129.61 plus GST in costs.
This argument is not inherently persuasive. Comparisons between plaintiffs' and defendant's costs in specific performance litigation of this kind is not an obviously reliable tool of analysis. There are too many differences between the role and burden on these plaintiffs and this defendant in this litigation for it to be a useful comparison. The defendants have played an essentially passive or responsive role here. Meanwhile the plaintiffs have had the burden of working out what course to take in furthering specific performance litigation under the supervision of the Court. Much of the contention in these proceedings ultimately melted away but the plaintiffs should not be penalised for incurring reasonable costs in preparing themselves to be ready for the potential for conflict, particularly given the meticulously crafted defences that were fielded against the plaintiffs before the Court's first judgment in April 2022.
But the defendant's disproportion argument does point out one significant weakness in the plaintiffs' case: that its billing practices merged fee charging for the primary proceedings and for the appeal and for non-litigious aspects of the work of the plaintiffs' solicitors, McCabes. Ultimately Mr Lacey had to make estimates in his last affidavit of how these various categories were divided up. Whilst this might be able to be done on a detailed cost assessment, that kind of organisation of billing systems makes more difficult the task of proof and recovery on a specified gross sum costs order claim. But in the end, there was not a large margin between these parties - a little less than $23,000 - and judicial experience and scrutiny can be brought to bear on such estimates which involve questions of professional judgment.
The defendant submitted that this aspect of the plaintiff's case was so troubling that the Court should take the approach taken in Muritini v Lawcover Insurance Pty Ltd [2022] NSWSC 1593 and deny the plaintiffs their costs of the February 2023 motion. The Court will not take that course. The problem here is not one of a successful party deliberately attempting to overreach the loser on quantum of costs, nor is it an exaggerated ambit claim, although it is high in places and will be reduced as is explained below.
Costs Not Properly Claimable. The defendant claims that the number of costs claimed by the plaintiff are not properly claimable in the proceedings. These include the work-related to preparation of bills of costs for the appeal proceedings, work related to terminating the prior real estate agent for the plaintiffs and amending a real estate agency agreement, work related to demanding payment of gross sum orders and researching solvency issues, and work-related to the termination of the contract of sale. It is not necessary to be more specific, but these criticised items amount together to approximately $20,000 of the original $65,618.94 that the plaintiffs claimed. Mr Roberts seeks to justify these amounts of costs not claimable by a detailed analysis of McCabes bills of costs identifying criticised amounts falling into each category.
The plaintiffs countered by making some concessions but seeking to defend many of these costs. The plaintiffs accepted that costs of the appeal are not recoverable on the present application, but they took issue with the quantum of costs that Mr Roberts attributed to the appeal and said that some of them related also to the trial. And on this issue of overlapping costs of the appeal (amounting to some $10,762) the Court takes a somewhat more sceptical view of the plaintiffs claim and that about half of these costs are likely to relate to the appeal.
The plaintiffs accepted that costs relating to dealings with the real estate agent were not recoverable. This amounted to a sum of $5,115.
The plaintiffs pressed lesser sums of work relating to solvency issues and termination of the contract of sale. In the Court's view these are recoverable. Testing the defendant's solvency was an important issue for the plaintiffs when making judgements about what course of action to take in specific performance proceedings such as these. Work relating to the termination of the contract of sale is also relevant to the trial proceedings, as there were a range of arguments fielded before the first judgment about how termination could occur once specific performance proceedings have been commenced.
Under this head the plaintiffs are criticised for claiming the cost of senior counsel at the directions hearing on 13 September 2022. Although that hearing ended up not being a contest, the briefing of senior counsel for this directions hearing can be justified because the plaintiffs were asking the Court on that occasion to make declarations that the defendant had repudiated the contract and further orders vacating the decree of specific performance made on 6 April. Given the issues that had previously been ventilated about those issues, briefing senior counsel was appropriate for this directions hearing.
Work in Progress (WIP) and Estimated Cost of the February 2023 Motion. The defendant is strongly critical of the presentation of this part of the plaintiffs claim which relates to fees incurred in relation to the February 2023 motion after 1 February 2023, amounting to some $18,240.70.
The nature of the contest raised by the defendant on this issue is well identified in the defendant's written submissions as follows: "23. The plaintiffs claim WIP and estimated costs from 1 February 2023.6 The work to which this relates is entirely unexplained. 24. Some of these costs presumably relate to the Second Gross Sum Costs Motion. Work was already done on this motion prior to 1 February 2023,7 and the vast majority of the affidavit of Andrew Lacey sworn 14 February 2023 is simply procedural background cut and pasted from previous affidavits. The only new paragraphs are 24, 29, 30, 34, 35, 39-42. Only the last nine pages of the exhibit are new. 25. The plaintiffs were told at the directions hearing on 17 February 2023 that they needed to "open their books" and disclose their costs candidly. Despite these warnings, there is nothing in the affidavit of Andrew Lacey sworn 24 February 2023 which attempts to explain or justify the WIP and estimated costs. 26. These costs required justification. Despite the obvious efficiencies that would arise from this being the second gross sum costs application in these proceedings, it appears that Mr Lacey estimates that the costs for this second, more modest, gross sum costs application will be essentially the same as the First Gross Sum Costs Motion ($23,510.00 plus GST as against $25,737.50 plus GST). 27. The plaintiff is required to adduce evidence that allows the Court to have sufficient confidence that the gross costs sum is fair between the parties: Colquhoun v District Court of NSW (No 2) [2015] NSWCA 54 at [6] (Beazley P, Barrett and Leeming JJA). A bare statement of costs and disbursements is inadequate: Colquhoun at [7]."
In response to this submission the plaintiffs invoiced their costs up to 3 March 2023 and elected only to seek to recover part of those costs that they said related to the motion. The plaintiffs submit that from the invoice issued to the client the costs primarily concerned the present gross sum cost application including the appearance on 17 February 2023. The Court is satisfied that the invoice reflects this submission and subject to general discounts for solicitors fees will generally allow this amount but with a slight reduction. The Court can see the range of evidentiary and submission work done on the motion and can make its judgements from its own knowledge of that background. The plaintiffs were hampered to a degree by their own mixed billing practices but their approach to preparing for and presenting the s 98(4)(c) application has been reasonable.
The Appropriate Percentage Discount. There is also a contest about what percentage discount should be applied to solicitors' and counsel's fees for the plaintiff. The margin involved in this contest is not great.
The plaintiffs propose a discount to solicitors fees of 65% as appropriate and the plaintiffs submit that counsel's fees should be recovered at 100%.
As to the solicitors' fees, the defendant submits that 60% is an appropriate discount. The argument for such a further financial reduction is not obvious when 65% is already close to the lower end of the range of probable percentage discounts on assessment. The Court also has its own positive impressions of the efficiency of the solicitors for the plaintiffs and sees no reason to discount any further.
As to counsels fees, the defendant cites authority (Russo & Ors v Russo & Ors (No. 4) [2016] NSWSC 1133 at [24] and subsequent cases considering it) and says that 85% is a standard discount. But even though some costs assessors will reduce counsel's fees by 10% to 15%, whether there is such a discount applied very much depends upon the circumstances. And every set of counsel's fees must be examined in the light of the contest in which they are issued. The counsels' fees here are reasonable and certainly not at the high end of the range in what was argued as a conceptually difficult case at times. No discount will be allowed
An Overall Assessment. A degree of synthesis of these various considerations is still required in reaching a final figure without the need to undertake a precise arithmetic calculation. The Court will not deprive the plaintiffs of the costs of the February 2023 motion as was also suggested by the defendant. The plaintiff has been mostly but not entirely successful on the various contests between the parties. Taking a broad-brush approach, the Court will make a specified gross sum costs order for the balance of the plaintiff's costs of these proceedings, not already covered by the payment of costs in the sum of $43,000.

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Judgment (6 paragraphs)

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Cases Cited (11)