Sheppard v State of New South Wales

Supreme Court of NSW|2017-07-21|Before: Lonergan J, Walmsley J

Judgment

By Notice of Motion filed on 14 August 2014, the defendants seek an order under s 98(4)(c) of the Civil Procedure Act 2005 (NSW) ("the Act") for a costs award to be made by a specified gross sum instead of assessed costs.
An order is also sought for interest on costs pursuant to s 101 of the Act.
The primary proceedings involve a bush fire which began near Mt Hall in the Blue Mountains National Park on Christmas Eve in 2001. Russell and Joanne Shepard ("the Plaintiffs"), together with a number of other plaintiffs, alleged that the defendants were negligent in their response to the fire.
The substantive hearing began on 24 October 2011 and was completed after 88 days on 24 May 2012. By judgment dated 26 June 2012, Walmsley J ordered verdicts for the defendants against each plaintiff together with costs.
On 28 June 2012, after further argument, the plaintiffs were all ordered to pay the defendants' costs on an indemnity basis and the defendants were given liberty to apply for the orders now sought.
Affidavit evidence shows that over the intervening years, negotiations have proceeded with all the other plaintiffs regarding costs, and all but Russell and Joanne Sheppard have resolved their costs with the defendants.
Between August 2014 and 21 July 2017, when the matter first came before me for hearing, there had been multiple attempts at service upon the Plaintiffs. Many letters were written that remained unanswered. Six directions hearings were held at which neither Russell nor Joanne Sheppard appeared. A substituted service order was made in March 2017 for one of the affidavits still to be served, due to the ongoing difficulty in effecting complete personal service upon both of the Plaintiffs.

Proceeding in the absence of the Plaintiffs

Affidavit evidence relied upon by the defendants reveals that the defendants' solicitors have made multiple attempts to engage the Plaintiffs in discussion regarding the costs orders made against them but to no avail. The relevant history set out in the affidavits includes multiple unsuccessful attempts at service between August 2014 and early 2015; unanswered letters to the Plaintiffs on 26 November 2014, 4 February 2015, 9 April 2015 and 15 April 2015 inviting the plaintiffs to participate in mediation and further correspondence in October 2015 advising of the further return date for the motion of 19 November 2015.
On 28 October 2015 Russell Sheppard was personally served with the notice of motion at his work address. The following is an extract from an Affidavit of Service of the process server, Kurt Hippe dated 9 November 2015: "4. On Wednesday the 28 day of October 2015 at 12:20 pm in the afternoon, I attended business address of Russell Sheppard at [address redacted] in the State of New South Wales and served a Notice of motion along with accompanying letters for Russell and Joanne Sheppard. 5. At the time of service of the said Notice of motion, I male arrived at the site in a [vehicle details redacted] aged in his mid 50's, 172 Cm, Stocky build, blond redish untidy hair with a fair to reddish complexion. 6. I said "Russell" he replied "Yes" I said "Russell Sheppard I have some papers for you and Joanne Sheppard" He said "How do you know do you know I am Russell Sheppard? I am not accepting anything" 7. I said "I am serving you with a Notice of Motion and accompanying legal documents and letters" I placed the documents in front of him. 8. Russell Sheppard then replied "have you heard of Timothy McVeigh, you know what happened with him" I said "thank you" and left the Notice of motion along with the accompanying documents and letters where I had placed them in front of Russell Sheppard and left the area.
On 19 November 2015, the defendants' Notice of Motion was listed before Justice McCallum. There was no appearance for either Plaintiff. The matter was referred for mediation and adjourned to 4 March 2016 for further directions.
Further letters were written by the defendants' solicitor in an effort to arrange mediation. There was no reply. At the directions hearing on 4 March 2016, there was no appearance for the Plaintiffs.
Personal service of the Notice of Motion and associated affidavits and correspondence was effected upon Joanne Sheppard on 18 March 2016.
The process server provided the following account: "4. On Friday the 18th day of March 2016 at 11:08am in the morning, I attended the residential address of Joanne and Russell Sheppard at [street address redacted] in the State of New South Wales and served a Notice of Motion along with an accompanying letter for Joanne Sheppard. 5. At the time of service of the said Notice of motion the house appeared to be secured with a [vehicle details redacted] parked in the front yard at the residence. 6. I attended the front door of the residence which was opened with the fly screen closed. On knocking on the door I saw a female aged in her mid to late forties, 165 cm tall with short brown hair and wearing spectacles. I said "Hi Joanne, you're Russell's wife Joanne". She replied "yes". I said "Joanne Sheppard I have some legal documents for you". She replied "I am no longer Joanne Sheppard". I said "I am serving you as you were known as Joanne Sheppard". She replied "I am not accepting the documents". I then placed them at her feet and said "you have been served"."
This was followed by further letters to the addresses where service had taken place advising of the next directions hearing and inviting the Plaintiffs to engage in mediation. No reply was received.
Further attempts at service of the detailed report of Ms Vine Hall (costs expert) were made unsuccessfully between June 2016 and February 2017.
On 18 May 2017, the Deputy Registrar of the Court ordered that there was no requirement for the Vine Hall report and affidavit to be personally served on Russell Sheppard.
By letter of 21 June 2017 the plaintiffs were advised of the listing of the matter on 21 July 2017.
I am satisfied by the attitude communicated in the conversations with the process server by both Russell and Joanne Sheppard as set out at [12] and [16] above, the failure to appear at any of the direction hearings and the failure to engage with any of the correspondence of the defendants' solicitor is one of refusal to participate in or defend the orders sought.
Sections 56 and 57 impose obligations upon parties to litigation: 56 Overriding purpose (1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. (2) The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule. (3) A party to civil proceedings is under a duty to assist the court to further the overriding purpose and, to that effect, to participate in the processes of the court and to comply with directions and orders of the court. (4) Each of the following persons must not, by their conduct, cause a party to civil proceedings to be put in breach of a duty identified in subsection (3): (a) any solicitor or barrister representing the party in the proceedings, (b) any person with a relevant interest in the proceedings commenced by the party. (5) The court may take into account any failure to comply with subsection (3) or (4) in exercising a discretion with respect to costs. (6) For the purposes of this section, a person has a relevant interest in civil proceedings if the person: (a) provides financial assistance or other assistance to any party to the proceedings, and (b) exercises any direct or indirect control, or any influence, over the conduct of the proceedings or the conduct of a party in respect of the proceedings. (emphasis added) 57 Objects of case management (1) For the purpose of furthering the overriding purpose referred to in section 56 (1), proceedings in any court are to be managed having regard to the following objects: (a) the just determination of the proceedings, (b) the efficient disposal of the business of the court, (c) the efficient use of available judicial and administrative resources, (d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties. (2) This Act and any rules of court are to be so construed and applied, and the practice and procedure of the courts are to be so regulated, as best to ensure the attainment of the objects referred to in subsection (1). (emphasis added)
The obligations of cooperation have been ignored by the Plaintiffs. Given the history, I consider it appropriate to proceed to determine the application and to make orders in the absence of the Plaintiffs.

Legislative power and principles for costs to be assessed in a gross sum

Section 98 of the Act provides relevantly as follows: 98 Courts powers as to costs (1) Subject to rules of court and to this or any other Act: (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis. (2) Subject to rules of court and to this or any other Act, a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court. (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. (4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to: (a) costs up to, or from, a specified stage of the proceedings, or (b) a specified proportion of the assessed costs, or (c) a specified gross sum instead of assessed costs, or (d) such proportion of the assessed costs as does not exceed a specified amount. (emphasis added) (5) …. (6) …..
Indemnity costs orders have already been made against the plaintiffs. Section 98(4) makes specific provision for an order of the type the defendants seek. The principles have been set out in the judgment of Beazley JA in Hamod v State of New South Wales [2011] NSWCA 375, [813]-[820]. [813] The discretion thereby conferred upon the court is not confined and may be exercised whenever the circumstances warrant its exercise, having regard to the scope and purpose of the provision: Harrison & Anor v Schipp [2002] NSWCA 213; 54 NSWLR 738 per Giles JA at [21]-[22]. In Harrison v Schipp, Giles JA considered that the discretion in s 98(4) may be exercised where the assessment of costs would be protracted and expensive and, in particular, if it appeared that a party obliged to pay the costs would not be able to meet a liability of the order likely to result from the assessment. However, his Honour stated, at [22]: "The power 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." [814] See also Wentworth v Wentworth (Court of Appeal, 21 February 1996, unreported). The courts have typically applied a discount in assessing costs on a gross sum basis: Ritchie's Uniform Civil Procedure NSW, LexisNexis, Sydney, 2005 to date, "Civil Procedure Act", at [s 98.65]; Charlick Trading Pty Ltd v Australian National Railways Commission [2001] FCA 629; Sony Entertainment (Aust) Ltd v Smith (2005) 215 ALR 788; Idoport Pty Ltd v National Australia Bank Ltd; Lorenzato v Lorenzato & Anor (No 2) [2011] NSWSC 790 per Black J. [815] In Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119; 135 ALR 160, von Doussa J noted that the specified gross sum costs procedure was particularly useful in complex cases, that the power must be exercised judicially and only after giving the parties an adequate opportunity to make submissions, and that before exercising the power the court should be confident that the approach taken to estimate costs is fair, logical and reasonable. [816] The terms of s 98(4), together with the more general considerations reflected in the Civil Procedure Act, ss 56(1), 57(1)(d) and 60, suggest the factors that merit particular consideration include: the relative responsibility of the parties for the costs incurred (for example, Harrison v Schipp); the degree of any disproportion between the issue litigated and the costs claimed; the complexity of proceedings in relation to their cost; and the capacity of the unsuccessful party to satisfy any costs liability: Ritchie's Uniform Civil Procedure NSW at [s 98.45]. [817] The exercise of the power conferred by s 98(4) is particularly appropriate where the costs have been incurred in lengthy or complex cases and it is desirable to avoid the expense, delay and aggravation likely to be involved in contested costs assessment. This may arise either from the likely length and complexity of the assessment process: Beach Petroleum NL v Johnson (No 2) at 120; Charlick Trading Pty Ltd v Australian National Railways Commission; Australasian Performing Rights Association Ltd v Marlin [1999] FCA 1006; or from the likelihood that the additional costs of formal assessment would disadvantage the successful party because of the likely inability of the unsuccessful party to discharge the costs liability in any event: Harrison v Schipp; Sony Entertainment (Aust) Ltd v Smith (2005) 215 ALR 788 at [90], [194]-[195]; Hadid v Lenfest Communications Inc [2000] FCA 628. [818] The power may also be exercised where a party's conduct has unnecessarily contributed to the costs of the proceedings, especially where the costs incurred have been disproportionate to the result of the proceedings: Leary v Leary [1987] 1 WLR 72; [1987] 1 All ER 261; Sony Entertainment (Aust) Ltd v Smith; Microsoft v Jiang (2003) 58 IPR 445; [2003] FCA 101; Ritchie's Uniform Civil Procedure NSW at [s 98.60]). [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: Harrison v Schipp at 743; Hadid v Lenfest Communications Inc at [35]; Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR 1 at 5; [1999] FCA 673. [820] The costs ordered should be based on an informed assessment of the actual costs having regard to the information before the court (for example, by relying on costs estimates or bills): Beach Petroleum NL v Johnson (No 2); Leary v Leary; Harrison v Schipp at 743 ; Sparnon v Apand Pty Ltd (FCA, 4 March 1998, unreported) . The approach taken to estimate the costs to be ordered must be logical, fair and reasonable: Beach Petroleum NL v Johnson at 164-165; Hadid v Lenfest Communications Inc at [27]; Harrison v Schipp at 743. This may involve an impressionistic discount of the costs actually incurred or estimated, in order to take into account the contingencies that would be relevant in any formal costs assessment: Leary v Leary at WLR 76 per Purchas LJ; Beach Petroleum NL v Johnson (No 2) at 123; Auspine Ltd v Australian Newsprint Mills Ltd at 164-165.
In broad terms the discretion available in s 98(4) may be exercised where the assessment of costs will be protracted and expensive, where it appears a party obliged to pay the costs would not be able to meet a liability for the order likely to result from the assessment and where it can be done fairly between the parties, with confidence that the approach taken to the estimate of costs is fair, logical and reasonable.

Affidavit Evidence regarding the costs estimate

The affidavits in support of the application comprised the following: 1. Special Counsel Timothy Hackett, the solicitor who conducted the proceedings and instructed Counsel; 2. Deborah Vine-Hall, a highly experienced and respected costs consultant which annexed a very detailed report providing a detailed analysis of the potential costs assessment; 3. Solicitor Ms Deisner setting out attempts at service, correspondence with the Plaintiffs and attempts to engage the Plaintiffs in negotiation; and 4. A series of affidavits of process servers regarding the many attempts at service of the notice of motion, letters and affidavits.
The affidavit of Mr Hackett outlines the nature of the legal work conducted. He deposes to the commencement of the wider proceedings in May 2002 when the first Statement of Claim was filed and served. Russell and Joanne Sheppard's Statement of Claim was filed on 4 October 2005. The affidavit outlines that in May 2008, mediation occurred at which some of the proceedings were settled and Offers of Compromise were served on the remaining plaintiffs. Proceedings were case-managed toward a second mediation in 2009. There were some costs orders made against the defendants. The substantive hearing commenced in October 2011, and finished with oral submissions on 24 May 2012. Judgment was delivered on 26 June 2012 and indemnity costs orders were made on 28 June 2012.
Mr Hackett's affidavit sets out the associated legal costs and disbursements in a detailed schedule and chronology, cross referencing the expenses to evidence of (the exhibited) receipts for payment of disbursements and counsels fees.
Taking into account the commencement date, costs orders made in favour of the plaintiffs (and the defendants) and the respective complexities associated with each of the plaintiffs' causes of action, Mr Hackett concluded that a reasonable apportionment to the Plaintiffs of the defendants' total costs of the proceedings (the sum of $6,523,833.33) is a sum of $421,615.83.
The report of Ms Vine-Hall dated 24 July 2014 annexed to her affidavit provides a range of estimates for the total fees that could be expected to be recovered by the defendants if they proceeded to formal assessment. Ms Vine-Hall was asked to address the following specific questions: 1. An estimate of the time that would be required to undertake an assessment of the defendants' costs under Pt 3.2 of the Legal Profession Act 2004 (NSW); 2. An estimate, or range of estimates, for the total fees that could be expected to be recoverable by the defendants on assessment, by proportion or amount of the fees actually charged as described in Mr Hackett's affidavit, given the costs orders made in the proceedings; and 3. To the extent she was able, an estimate or range of estimates of the likely costs, for all parties, of such an assessment and the costs that would be avoided if the matter proceeded by way of gross costs order rather than by assessment.
To do this, Ms Vine-Hall considered the methodology adopted by Mr Hackett. She took into account descriptions in Mr Hackett's affidavit of the costs claimed in the individual matters and having regard to the methodology adopted addressed the question of whether the approach taken for calculating costs payable was logical, fair and reasonable in result. She also considered whether the amount claimed for costs was logical, fair and reasonable.
Ms Vine-Hall concluded that the process of assessment could take at least 26 months without considering the possibility that the Plaintiffs may choose to provide individual objections to the defendants' applications for assessment. She said that filing fees alone would exceed $65,000, preparation of itemisations would cost at least $250,000, preparation of global objections could cost $50,000, and responses another $10,000. She concluded the total costs would be in the order of $395,000 simply to prepare and carry the costs assessment through the necessary processes to finality.
Ms Vine-Hall concluded that the methodology adopted to accommodate multiple costs orders during the proceedings was logical, that the total of $6,523,883.33 claimed for the entire proceedings was reasonable, including a finding that the rates charged by the solicitors and counsel were reasonable and concluding that they were likely to be allowed without reduction on the ordinary basis as well as consistent with the order made here by the hearing judge on an indemnity basis.
Ms Vine-Hall concluded that the work was carried out in a reasonable way, that there were appropriate delegations for work and the division of labour was economical and the staffing level working on the matter was conservative.
Ms Vine-Hall considered that if costs were to be assessed, the defendants would be likely to recover $6,077,722.97 for the whole proceeding. She also concluded that there was no particular identifiable reason as to why the Court should, in making a gross sum order, make any particular reduction or discount as she had already factored in potential arguments and consideration.
Ms Vine-Hall concluded that even in party/party costs orders, 85% of the costs charged by the defendants in this matter were likely to be recovered on assessment and costs incurred during the period where the defendants were entitled to costs on an indemnity basis, approximately 95% of the costs would be recovered.
The affidavit of Ms Diesner sworn 18 July 2017 deals with the many efforts to engage the Plaintiffs in negotiation on costs and of this Notice of Motion through the Court to date. It deposes to correspondence forwarded to the Plaintiffs and attempts at formal service over the last three years. That correspondence includes notifying the Plaintiffs that the defendants seek to have a gross sum costs order made and inviting the Plaintiffs to engage in negotiation regarding costs. There was also a specific invitation to the Plaintiffs to provide a statement of assets and liabilities to further negotiations. Mediations were also proposed but could not proceed due to lack of cooperation from the Plaintiffs.
It is evident from the affidavit of Ms Diesner, and the affidavits of service and attempted service, that the plaintiffs have made a conscious choice to take no role in this part of the proceedings.

Decision regarding gross sum costs order

The entitlement resting with the defendants to recover costs from the unsuccessful plaintiffs on an indemnity basis is clear. The discretion I have to exercise pursuant to s 98(4) of the Act requires me to be confidently satisfied that any amount owed is no greater than an amount that a formal assessment of costs will produce. I also need to consider whether the approach taken to the estimate of costs set out in the affidavit material is logical, fair and reasonable.
Obviously there has been no challenge to the affidavit material because there has been no appearance by the Plaintiffs to challenge it. The cases suggest that I need to take a broad brush approach to the gross sum assessment. I am to, in exercising this discretion, apply s 56 of the Act to facilitate just, quick and cheap resolution of the issues in dispute.
I have taken into account, given the absence of any legal representatives to deal with the costs part of these proceedings, that the Plaintiffs are likely to remain unrepresented through any costs assessment process. I agree with the observation of Davies J in Chaina v Presbyterian Church (NSW) Property Trust (No 26) [2014] NSWSC 1009 at [50(c)] and [51] that it is appropriate to take into account this fact and its likely effect on the costs and complexities of pursuit of a formal costs assessment process.
Whilst costs orders have been made, to proceed down the path of formal costs assessment would require much further work, which on its own would create very significant further expense that it appears unlikely ever to be recovered by the defendants. One obvious order to bring proceedings to finality would be to make a gross sum costs order if I consider it reasonable and appropriate to do so. The defendants can then choose to commence recovery proceedings if so minded.
I am of the view that the plaintiffs have been given adequate opportunity to respond, to negotiate, to be heard, to appear and to make submissions. On the evidence before me, no reply of any kind by letter or phone call has been provided to the defendants' solicitors in response to their invitations to engage in discussion about costs or to cooperate with or respond to this Notice of Motion or to appear at court.
I am satisfied having read the evidence in support of the application that it is appropriate to make the orders sought. It seems to me to be just and fair for the defendants to proceed in this way and is also consistent with the requirements of ss 56 and 57 of the Civil Procedure Act. The carefully collated affidavit material supports responsible, reasonable and competent preparation of this complex litigation. The attribution to the Plaintiffs of the sum of $421,615.83 from the overall costs figure appears to be reasonable.
I take the view that an overall reduction of 20% should be made to ensure that exigencies that may apply in a formal assessment of costs is not lost to the Plaintiffs. In all the circumstances I consider it to be just and fair outcome that the sum of 80% of $421,615.83, being $337,292.66 is the specified gross costs sum.

Application for interest on costs

The defendants assert that they are entitled to interest on costs under s 101(4) of the Act which provides as follows: 101 Interest after judgment (1) Unless the court orders otherwise, interest is payable on so much of the amount of a judgment (exclusive of any order for costs) as is from time to time unpaid. (2) Interest under subsection (1) is to be calculated, at the prescribed rate or at such other rate as the court may order, as from: (a) the date on which the judgment takes effect, or (b) such later date as the court may order. (3) Despite subsection (1), interest is not payable on the amount of a judgment if the amount is paid in full within 28 days after the date on which the judgment takes effect, unless the court orders to the contrary. (4) Unless the court orders otherwise, interest is payable on an amount payable under an order for the payment of costs. (5) Interest on an amount payable under an order for the payment of costs is to be calculated, at the prescribed rate or at any other rate that the court orders, as from the date the order was made or any other date that the court orders. (6) This section does not authorise the giving of interest on any interest payable under this section. (7) In this section, a reference to the prescribed rate of interest is a reference to the rate of interest prescribed by the uniform rules for the purposes of this section.
Section 101 does provide the discretion to order that interest is to be paid "on an amount payable under an order for payment of costs". I observe that other than an order for indemnity costs, no identification of a specific sum for costs due to be paid by the Plaintiffs to the defendants has been made until this judgment.
Mr Hackett's affidavit says that all costs claimed have been paid and the dates of payment are shown in several spread sheets exhibited to his affidavit.
The defendants submitted that they would be entitled to an order for interest calculated in accordance with Leda Pty Ltd v Weerden (No 2) [2007] NSWCA 283 from the dates of payment, or alternatively at least from the date of the costs order made by Walmsley AJ on 28 June 2012. I do not agree that would be a just outcome.
While the evidence supports personal service of the Notice of Motion and some of the affidavit evidence on Russell Sheppard on 28 October 2015 and on Joanne Sheppard on 18 March 2016, what is identified is a potential argument about what approach should be taken by the Court and the parties to the identification of costs payable.
The affidavits before me indicate efforts were made to engage the Plaintiffs in debate about resolution of the unpaid costs. The defendants submit that on 28 June 2012 when the indemnity costs order was made in their favour by Walmsley AJ, it was "clearly contemplated" that an application would be made by the defendants for an order for interest on costs as well as the gross costs order application. There is however no order identifying "an amount payable under an order for payment for costs" and it was over five years before the defendants' material on costs was ready and the applications heard. To that extent, no payment of the defendants' costs due to them by the Plaintiffs could be made until now.
The principles relevant to my discretion to award interest on costs were collected together in the following extract from the judgment of Campbell J in Lahoud v Lahoud [2006] NSWSC 126 at [82]-[83]: [82] In my view it is appropriate to make an order for the payment of interest on costs. There is no requirement, before an order for payment of interest on costs is made, for the Court to be satisfied that the circumstances of the case are out of the ordinary: Grogan v Thiess Contractors Pty Ltd & Anor [2000] NSWSC 1101 at [10] per Barr J; Australian Development Corporation Pty Ltd v White Constructions (ACT) Pty Ltd (in liquidation) & Ors [2002] NSWSC 280 at [23]-[25] per Einstein J; Puntoriero & Anor v Water Administration Ministerial Corporation [2002] NSWSC 217 at [10] per Grove J; Davies v Ku-ring-Gai Municipal Council [2003] NSWSC 1010 at [7] per Austin J. [83] To the extent to which the plaintiffs have been out of pocket as a result of having to pay their lawyers' costs and disbursements, it is appropriate that the compensation which is recognised in the Court's order for costs take into account the fact that the plaintiffs have been out of pocket in that way: Hughes Bros v The Trustees of the Roman Catholic Church [1999] NSWSC 1051 at [60]; Grogan v Thiess Contractors Pty Ltd & Anor [2000] NSWSC 1101 at [12]; Woods v Woods [2001] NSWSC 1108 at [29]; Australian Development Corporation Pty Limited v White Constructions (ACT) Pty Ltd (in liquidation) & Ors [2002] NSWSC 280 at [17]; Puntoriero & Anor v Water Administration Ministerial Corporation [2002] NSWSC 217 at [10]; Optus Networks Pty Ltd & Ors v Leighton Contractors Pty Limited & Ors [2005] NSWSC 156 at [9]; Roads and Traffic Authority v Cremona (No 3) [2005] NSWCA 13 at [34]. Given the length of time the proceedings have been on foot and the extensive preparation, the amount by which the plaintiffs have been out of pocket could be large. It is relevant that the plaintiffs, and the defendants, each conduct businesses and so the amounts which the plaintiffs have had to pay to finance the litigation is likely to be money which otherwise could have been put to a productive use. Conversely, the defendants, by not being required to pay costs until some time in the future when the costs are agreed or assessed, are likely to have been able to retain, for their own productive use, the amount of those costs.
This approach was approved by the Court of Appeal in Leda Pty Ltd v Weerden (No 2) [2007] NSWCA 283 at [7]-[9].
The principles suggest I do not need to be satisfied before an order for payment of interest on costs is made that the circumstances of the case are out of the ordinary. I should consider the extent to which the defendants have been out of pocket as a result of having to pay their lawyers' costs and disbursements. His Honour Justice Campbell also took into account the length of time the proceedings had been on foot, the extensive preparation and potential for the applying party to have been out of pocket.
Whilst I appreciate all those considerations are important, I am of the view that the circumstances here are different. The Plaintiffs, it seems, no longer have the benefit of any legal representation. Whilst it is entirely inappropriate to "run dead" on correspondence regarding costs and service of legal process and to fail to appear at dates set down for the hearing of interlocutory process in relation to costs, there has not been, until this judgment, any formality in securing with any precision the sum the Plaintiffs are due to pay to the defendants for costs.
In all the circumstances, I decline to award interest.
Obviously, by operation of s 101(3), if the Plaintiffs do not pay the specific gross costs sum within 28 days, interest on that sum will accrue from the date of this judgment.

Orders

I make orders as follows: 1. The defendants' costs are to be paid on the basis of a specified gross sum instead of assessed costs. 2. The specified gross sum due to be paid by the Plaintiffs to the defendants is $337,292.66. 3. The Notice of Motion is otherwise dismissed.

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: 09 February 2018

Legal Profession Act 2004(NSW)

(Uniform Civil Procedure Rules 2005(NSW)r 2.1)

Civil Procedure Act 2005(NSW)ss 56, 57, 98, 101

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (8 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (24)

Cited By (1)