Sethi v The Owners - Strata Plan 93392

Introduction

1. Although I have found that the circumstances are such that it is appropriate for the Court to give consideration to the exercise of its discretion to make a gross sum costs order under s 98(4)(c) of the CPA, the power "should only be exercised when the Court considers that it can do so fairly between the parties and where an appropriate sum can be determined from the available materials": Harrison at [22]; Ahern at [17]. I am satisfied as to the existence of both matters.
2. I turn now to the quantification of the defendant's costs. This needs to be an informed assessment so as to permit the Court to make a "logical, fair and reasonable" estimate: Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119, 123; [1995] FCA 350. In undertaking that assessment, however, the Court applies a "broad brush", mindful that the process is not to take on the characteristics of a formal costs assessment - something that would defeat the purpose of the order: Ahern at [18].

The substantive proceedings

1. Ms Holland deposed that the total amount of professional costs and disbursements incurred by the solicitors for the defendant in the proceedings were $234,077.01 (including GST: Holland affidavit, pars 64 and 66, exhibit LMH-1, p 132). Some of these costs were accepted by the defendant not to relate to the current proceeding, but to the defendant "observing" related proceedings between the plaintiff and his landlord (Holland affidavit, par 73). The amount of costs incurred in observing those related proceedings were estimated to be $11,610.00 (excluding GST: Holland affidavit, par 73, exhibit LMH-1, p 133). I am satisfied those costs should not form part of the costs properly claimed.
2. The costs and disbursements incurred by the defendant - excluding the costs referable to the defendant observing the related proceedings - are $201,687.74 (excluding GST) or $221,856.51 (including GST: Holland affidavit, par 81, exhibit LMH-1, p 131; defendant's submissions at [22]).
3. I will deal first with the professional costs claimed (see [22]-[24], above).
4. The affidavit sets out the hourly rates that were charged by the solicitors who undertook work on the matter. They are, respectively, $600.00 per hour plus GST (for a partner); $510.00 per hour plus GST (for a senior associate); and $300.00 per hour plus GST (for an employed solicitor). There is nothing to suggest that these rates are, in any respect, unreasonable. In relation to the hourly rate for Ms Holland, I would simply observe that she is a legal practitioner of considerable experience, and I have no hesitation in accepting the reasonableness of the rate that she charged, nor in accepting the other hourly rates as I have identified. Separately, I add: they are in line with the guidelines issued by the Costs Assessment Rule Committee.
5. Ms Holland described the activities undertaken, and the costs incurred, in considerable detail in the body of, and the exhibit to, her affidavit - which I accept. I am satisfied that this material enables me to arrive at a conclusion that is logical, fair and reasonable in connection with professional costs and disbursements. The solicitor for the defendant has explained, in her affidavit at par 69, the tasks undertaken by her, and her firm, in dealing with the plaintiff's proceedings and claims. The detail of the work specifically performed is set out in the respective invoices that were issued by that firm that were annexed to Ms Holland's affidavit. I accept Ms Holland's evidence, and am satisfied that the costs incurred, and now claimed, fairly and reasonably represent the work required to be undertaken to deal with the plaintiff's claim.
6. The procedural history of the proceedings is unusual. Whilst, often, in an application such as this (and in an affidavit in support of an application such as this) the breakdown of work is divided into identifiable stages through which the litigation has passed, here, however, the progress of the matter involved steps taken to have the plaintiff's proceedings the subject of repleading and, in default thereof, struck out and/or summarily dismissed. However, it is the steps taken by the plaintiff, and the manner in which he has sought to conduct the litigation that has caused considerable delay and significantly increased the costs that were required to be incurred by the defendant. This also informs why the evidence adduced to support the application involves attaching (and relying upon) the specific bills issued by the solicitors for the defendant that describe the nature and detail of the work performed.
7. As explained by Ms Holland, notably in her affidavit at par 70, the essential reason for the amount of professional costs and disbursements being in the order claimed lies in the conduct of the plaintiff: the manner in which the plaintiff has conducted the proceedings has substantially increased the work involved (and thus the costs), including necessitating multiple court appearances; responding or dealing with excessive numbers of emails and/or letters from the plaintiff in connection with his proceedings or his complaints more generally; and responding or dealing with the multiple numbers of motions that the plaintiff filed during the course of the proceedings, and indeed after they were dismissed. I accept this evidence and, in particular, her explanation about why the costs are of the order claimed. She also explained why she did not delegate some tasks - tasks that ordinarily would be delegated to a junior lawyer: the justification for not doing so, as Ms Holland explained, was because the "serious and personal" allegations made by the plaintiff and the need to shield and protect junior lawyers from accusations and the conduct of the plaintiff. I accept this is an entirely reasonable and justifiable explanation for why certain matters were not delegated to more junior lawyers and were carried out by Ms Holland.
8. Consistent with the above, it is important to emphasise a number of matters about the way in which the plaintiff has conducted the litigation in this Court (some of which were the subject of findings made in the primary judgment and inform why an order for indemnity costs was made). They serve to reinforce why the costs are at the level they are. It is sufficient to presently note three matters that illustrate this.
9. First, the plaintiff has filed in the order of twelve notices of motion seeking various interlocutory orders (usually seeking orders to set aside the orders made by Campbell J and myself) - and, invariably, they were accompanied by voluminous affidavits sworn by the plaintiff.
10. To recap: the procedural history of the plaintiff's claim leading up to the orders made by Campbell J on 17 July 2023 is set out in [11]-[20] of the primary judgment. Thereafter, following delivery of his Honour's ex tempore reasons, the plaintiff filed three notices of motion seeking various orders, including an application that Campbell J disqualify himself and an application to set aside the orders made on 17 July 2023. These developments, and the judgments that Campbell J delivered following the filing of them, are set out in [21]-[26] of the primary judgment. Following delivery of those judgments by Campbell J, the plaintiff attempted to file more notices of motion - on 2 and 31 August and 20 September 2023 - as well as a notice of intention to appeal on 14 August 2023 that identified as respondents to that appeal Campbell J, his Honour's Associate, the legal representatives for the defendant and the Secretary, NSW Department of Communities and Justice: see the primary judgment at [27]-[28]. Put simply, as I found in the primary judgment, rather than attend to the task of repleading any claim that he wished to advance, the plaintiff attempted to subvert the orders made by Campbell J by filing multiple notices of motion. That pattern and course of conduct continued following the delivery of reasons by me in the primary judgment: see the summary earlier in this judgment at [3] and [4] and the judgment that I delivered on 22 December 2023: Sethi v The Owners - Strata Plan 93392 (No 7) [2023] NSWSC 1647.
11. I note by way of illustration that, in connection with the solicitors for the defendant being required to deal with the way in which the plaintiff conducted the proceedings (before they were summarily dismissed), Ms Holland was required to attend court on six separate occasions in 13 business days in the period 30 May to 16 June 2023. Thus, even independently of the multiple notices of motion that the plaintiff filed (or sought to file), the conduct of the plaintiff has unjustifiably necessitated the defendant incurring significant legal costs.
12. Secondly, the way that the plaintiff has conducted himself, during the course of (and indeed even following the dismissal of) the proceedings that he sought to pursue in this Court, has resulted in the need for the solicitor for the defendant to send "in excess of 230 emails and letters…just between the plaintiff, [the solicitor for the defendant] and the Court", and the (double sided) printouts of those emails and letters (without attachments) extend to 3 lever arch folders. The exhibit to the affidavit of Ms Holland provides multiple examples.
13. Thirdly, the plaintiff's conduct during the course of the proceedings (and indeed after they were dismissed) has involved the making of scandalous allegations against those having some "involvement" with the plaintiff's claim and that conduct has also contributed to the significantly increased costs. I set out some examples of this conduct in the primary judgment at [73]-[79]. It has included, as I there pointed out, the plaintiff serving letters of demand upon senior counsel for the defendant and the solicitor for the defendant. It has extended beyond those representing the defendant, and has included judicial officers and Court staff.
14. The defendant also claims an amount for disbursements. These may conveniently be divided into two types: counsel's fees and other disbursements.
15. In relation to counsel's fees, these total $19,887.50. The invoices rendered by senior and junior counsel (except in one respect - relating to fees for the current notice of motion) are annexed to Ms Holland's affidavit and summarised in exhibit LMH-1, p 132. The fees are principally those relating to the involvement of senior counsel. The explanation for retaining senior counsel is contained in Ms Holland's affidavit, par 74. In short, because of the amount of damages claimed, and the outlandish allegations, she considered the retention of senior counsel to be justified. In my view, for the reasons Ms Holland gave, it was appropriate to retain senior counsel and junior counsel. I am satisfied, as well, that the rates charged by senior counsel and junior counsel are fair and reasonable. Separately, in this last respect, I would observe that they are in line with the guidelines issued by the Costs Assessment Rule Committee.
16. Ms Holland described the nature of the disbursements that were incurred in her affidavit at par 79. They are set out, and identified, in exhibit LMH-1, p 132, and relate to matters such as court filing and transcript fees, courier charges and copying. They total $6,629.74. I accept these disbursements were incurred, and reasonably so.
17. Ms Holland's evidence was that, based upon her experience, when an order for indemnity costs is made, the party seeking the costs would "usually" recover 90% of its professional fees on assessment, and that a party would "usually" recover 100% of counsel's fees and disbursements incurred on assessment: Holland affidavit, par 80. I accept that evidence.
18. In relation to the evidence about the extent to which claimed costs and disbursements are recovered on an assessment of costs ordered to be paid on an indemnity basis, two matters should be noted. The first is that when an order for indemnity costs is made, "all costs (other than those that appear to have been unreasonably incurred or appear to be of an unreasonable amount) are to be allowed": r 42.5(b) of the Uniform Civil Procedure Rules 2005 (NSW). The second is that, generally speaking, courts have applied a discount when assessing costs on a gross sum basis: Ahern at [18] and [42]ff. Nevertheless, it should be emphasised that although discounting is sometimes undertaken, even in a case involving an order for indemnity costs, it does not follow that discounting must occur: see Hancock v Rinehart (Lump sum costs) [2015] NSWSC 1640; Brown v The Stables Perisher Management Pty Ltd (No 2) [2022] NSWSC 902 at [37]. The "aptness of a discount primarily depends on the accuracy and reliability of the costs evidence available to the Court": Ahern at [18].
19. Given the defendant's evidence (which, I emphasise, I have no reason to think is other than accurate and reliable) and the guidance given by the above authorities as to whether, and if so to what extent, there should be a discounting in connection with a gross sum for costs assessed on an indemnity basis, I consider it appropriate to discount the total amount claimed by 10% - which is essentially in line with what the defendant submitted should occur.
20. I therefore propose to allow 90% of the professional costs, but to allow 100% of the disbursements (to be clear, including counsel's fees) - being, $184, 170.74 (excluding GST). As I later explain, there will be some slight adjustment to this in the final orders to be made.

The notice of motion

1. Consistent with the purpose of making a claim for a gross sum costs order in the substantive proceedings, the defendant also sought an order that costs payable on the notice of motion be assessed as a gross sum.
2. In my view, it is appropriate that the defendant have its costs of the notice of motion, and that they be assessed on a gross sum basis. In relation to this assessment, I am satisfied I can assess costs on a gross sum basis fairly and appropriately from the material: Harrison at [22]; Ahern at [17].
3. The solicitor for the defendant provided an estimate of legal costs - an estimate that took into account costs and disbursements incurred up to the date of filing of its evidence and submissions and an estimate in connection with the application after that time. This is set out in her affidavit at pars 82-83. The claim was based upon the mid-point of that assessment ($18,580.00 exclusive of GST).
4. In relation to professional costs, they were estimated to be between $14,600.00-$23,100.00 (excluding GST - there was a transcription error in the total of the lower end: it was said to be $14,060.00 but the correct amount is $14,600.00). In my view, subject to three matters, the evidence given by Ms Holland fairly and reasonably represents the work required to be undertaken to deal with this application and I accept both the estimate of time required, as well as the costs involved. The three exceptions are as follows. 1. First, given the plaintiff did not serve any evidence or submissions on the application, I will therefore not allow any amount for "[r]eview evidence and submissions relied upon by Plaintiff with respect to application". The amount claimed for this projected work was between $600.00 and $1,200.00. 2. Secondly, the defendant was also not required to "[p]repare any evidence and submissions in reply (including liaising with counsel to settle)". The amount claimed for this projected work was between $1,800.00 and $3,000.00. 3. Thirdly, I will also not allow any amount for what was described as "[p]reparation for and attendance at hearing of application (if required) (assume half day hearing)", simply because I have determined this application on the papers. The amount claimed for this projected work was between $4,800.00 and $7,200.00.
5. When the amounts claimed are adjusted to reflect what I have not allowed, the estimate reduces to between $7,400.00-$11,700.00. The mid-point of the revised assessment is $9,550.00 (exclusive of GST).
6. The defendant also claims for the fees - which are yet to be received - from junior counsel which relate to settling the evidence and submissions in support of the defendant's application. Ms Holland has estimated those fees do not exceed $1,000.00 (excluding GST). In my view, given the nature of the evidence, and the submissions provided in support, that assessment impresses as being an entirely fair and reasonable one, and I accept it.
7. Consistent with the approach in relation to the costs and disbursements claimed in connection with the substantive proceedings, the defendant seeks to recover 90% of the mid-point of estimated legal fees, but the full amount for counsel's fees. The overall amount claimed was $19,580.00 (excluding GST) and when the professional fees are adjusted, the amount claimed was $17,722.00 (excluding GST).
8. However, the mid-point, as I have allowed it, is $9,550.00 (excluding GST). As the defendant seeks to recover 90% of the estimated legal fees, this amount reduces to $8,595.00 (excluding GST). To this should be added counsel's fees ($1,000.00 excluding GST). I therefore assess the defendant's costs of the notice of motion on a gross sum basis in the amount of $9,595.00 (excluding GST).

Orders

1. For the reasons set out above, the defendant is entitled to gross sum costs orders in connection with the proceedings and its notice of motion filed 17 November 2023. Adjusted to allow for GST, the gross sum costs that I have assessed for the proceedings are $202,587.81 and for the notice of motion are $10,554.50. These amounts total $213,142.31.
2. The defendant, in its submissions, invited the Court to make, in its final orders, adjustments to reflect a slight rounding down. I have accepted this invitation, and slightly adjusted the combined amounts that I have assessed to $213,000.00.
3. Accordingly, I make the following order: 1. Order, pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW), the plaintiff pay the defendant's costs of the proceedings, and of the notice of motion filed 17 November 2023, in the gross sum of $213,000.00.

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