Simone Starr-Diamond v Talus Diamond

Evidence adduced on the motion - the defendant's costs. 5In the Court's second judgment the Court ordered that the plaintiff pay the defendant's costs of the proceedings on the ordinary basis: Starr-Diamond v Talus Diamond (No 2) [2012] NSWSC 1650 at [17]. Pursuant to that order for costs on 9 March 2013 Mr Hodges served on Ms Starr-Diamond, an itemised bill of costs. Mr Hodges also forwarded to Ms Starr-Diamond an application for assessment of party-party costs and invited her to lodge any objections. But Ms Starr-Diamond has not responded and Mr Hodges has not referred the bill of costs for assessment and no assessment has commenced. 6The defendant's bill of costs covers professional fees, costs and disbursements from December 2008 through until August 2012. It is a clearly crafted bill of costs setting out separately counsel's fees, other disbursements and the professional legal work performed by Mr Hodges and other suppliers of professional services. It includes all preparation for the hearings before Smart AJ and myself including all directions, hearings, and the making of consequential orders up until August 2012. The total amount claimed is $347,782.96. 7Mr Hodges also adduces evidence of two other groups of costs in respect of which he also seeks a specified gross sum costs order: (1) the defendant's costs and disbursements in defending actions in the Court of Appeal, to the value of $30,000; and (2) Ms Talus Diamond's costs of the application for the appointment of trustees for sale of the Tasmanian properties (Starr-Diamond v Talus Diamond (No. 3) [2013] NSWSC 351) determined on 5 April 2013, which costs and disbursements are to the value of $20,000 including counsel's fees of $9,956 and two filing fees each of $366.

Applicable Legal Principles 8The applicable principles in relation to the making of specified gross sum costs orders under Civil Procedure Act s 98(4)(c) may be shortly stated. Although the Civil Procedure Act s 98(4)(c) power has been described as particularly suited to complex litigation, the rule is expressed in general terms and is not limited to cases of that type: Australasian Performing Rights Assoc Ltd v Marlin [1999] FCA 1006 (Burchett J). The power to award a Civil Procedure Act s 98(4)(c) specified gross sum instead of assessed costs is exercised whenever the circumstances warrant its exercise; the purpose of the rule is to avoid the expense, delay and aggravation arising out of taxation: Beach Petroleum NL v Johnson (1995) 57 FCR 119 (von Doussa J). 9Probable inability to pay a costs order will usually provide a proper basis for the making of a s 98(4)(c) order. If the unsuccessful party ordered to pay costs is unlikely to be able to pay the amount of costs ordered then the successful party is further aggravated by having to fund the additional costs of taxation, those costs also being unrecoverable: Harrison v Schipp [2002] NSWCA 213 ("Schipp") at [21] (Giles JA) and Hadid v Lenfest Communications Inc [2000] FCA 628 ("Hadid") (Lehane J). 10There is no procedural obstacle to the Civil Procedure Act s 98(4) discretion being exercised now. Civil Procedure Act s 98(4) provides as follows: 98. Courts powers as to costs (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. 11The Court may make such an order "at any time before costs are referred for assessment". The existing costs order has not been referred for assessment. 12How does the lump sum assessment take place? The specified gross sum under s 98(4)(c) can be fixed broadly, having regard to all the information available to the Court: Schipp at [22] and Hadid at [27]. The approach taken to the estimation of costs must be "logical, fair and reasonable" and the powers should only be exercised when the Court considers it can do so "fairly between the parties, and that includes sufficient confidence in arriving at an appropriate sum on the materials available": Schipp at [22] per Giles JA.

The two questions for consideration 13There are two questions for consideration. Is this an appropriate case for ordering a specified gross sum instead of assessed costs? And, if it is, what is the appropriate specific gross sum order in this case? 14A specified gross sum costs order should be made here. The evidence in the course of these proceedings well warrants the conclusion that Ms Simone Starr-Diamond may be unlikely to pay a costs order at the conclusion of a costs assessment. The evidence and the course of proceedings do not disclose any evidence that Ms Starr Diamond has any assets other than those the subject of orders in these proceedings. The only properties of any clear net value remaining at the conclusion of the proceedings and in which Ms Starr-Diamond had an interest are the Tasmanian properties. Assuming the continuance of their values accepted at the time of the hearing, the Bakers Beach land is worth $130,000 and the Ambleside property $244,000. Thus the total value of the two properties is $374,000. Ms Starr-Diamond's notional half interest in those properties is therefore $187,000. But pursuant to order 5G that will be reduced by $120,000. Thus, Ms Starr-Diamond's equity in these properties available to satisfy the defendant's substantial claims for costs orders is only about $67,000. This is plainly insufficient to satisfy the costs orders against her. 15I do not see why, in these circumstances any party in the position of Ms Talus Diamond should have to expend further, probably irrecoverable, resources in a costs assessment. This is an appropriate case for the exercise of the Civil Procedure Act s 98(4)(c) discretion. 16What is the appropriate specified gross sum award? The Court has the advantage of the full bill of costs that would found a costs assessment, except for the costs associated with the third judgment Starr-Diamond v Talus Diamond (No. 3) [2013] NSWSC 351 and the Court of Appeal proceedings Starr-Diamond v Diamond [2013] NSWCA 7. But as to those the following can be said. 17The plaintiff was ordered to pay the defendant's costs of the application to appoint trustees for sale of the Tasmanian properties: Starr-Diamond v Talus Diamond (No. 3) [2013] NSWSC 351 at [22], order 10. Notwithstanding that no bill of costs has yet been served in respect of those costs, they are not substantial (estimated at $20,000). I see no reason why their quantum cannot be included in the gross sum costs order made in these reasons. Notwithstanding the lack of an itemised bill in my view costs can still be estimated on a logical fair and reasonable basis. I will therefore include this amount of $20,000 in the total assessment of the specified lump sum costs order. 18The same cannot be said for the group of costs claimed for the action in the Court of Appeal. Mr Hodges has estimated those costs and disbursement are to a value of $30,000 including counsel's fees of $15,544. There is also no itemised bill of costs in respect of these costs. Although Hoeben JA in the Court of Appeal ordered the plaintiff/appellant to pay the defendant/respondent's costs of the motion (Starr-Diamond v Diamond [2013] NSWCA 7 [37] Order 3), it would be appropriate for the Court of Appeal rather than myself as the trial judge to make a specified gross sum costs order in respect of those proceedings. Apart from any other reason indicating this course, it is difficult for this Court to estimate costs on a logical fair and reasonable basis and to have sufficient confidence in arriving at an appropriate sum on the materials available when I, as the trial judge, was not involved in the hearing in the Court of Appeal. One of the bases which a judge can take into account in making an appropriate specified gross sum costs order under Civil Procedure Act s 98(4)(c) is the judge's own experience of the litigation the subject of the proposed order. And no bill of costs has been served in respect of the motion in the Court of Appeal. I am not in a position to make a specified gross sum costs order in respect of those proceedings. The defendant can make an application in the Court of Appeal for such an order. 19In the result therefore I will include the claimed costs and disbursements of the third judgment of $20,000 as part of the total amount of costs to be assessed for the purpose of the specified gross sum order. So the total for consideration of a specified gross sum order will be $367,782.96 (being $347,782.96 plus $20.000). 20The Court sometimes has evidence in Civil Procedure Act s 98(4)(c) cases from solicitors and costs assessors indicating what percentage of a bill of costs is usually awarded as a result of a costs assessment. The Court can also act where there is not a full bill of costs available. Notwithstanding the lack of such solicitor's or cost assessor's evidence as to the common outcome of assessments, the Court's own experience of such matters and a review of the bill of costs itself here are a sufficient basis for forming a view as to an appropriate s 98(4)(c) award. 21The costs figures cited in the bill of costs do not appear surprising or disproportionate to the task in hand or to the amount in issue between these parties. The case was relatively financially complex. Neither the solicitors' professional costs nor counsel's fees nor disbursements seem in any way disproportionate. And I accept Mr Hodges' evidence that the rates claimed in the bill of costs are more than reasonable as the charge out rates for both counsel and himself (both less than $300 per hour) are "significantly below comparable commercial rates". Those figures comprise the bulk of the bill. Mr Hodges' evidence is plainly correct. It is a further basis for the Court to be confident in reaching a specified gross sum figure. 22Accordingly, I will award a specified gross sum instead of assessed costs in these proceedings, in the sum of $294,226.36 (being 80% of $367,782.96). 23This figure includes the costs of the present application. Although the present application is not costed in the bill of costs or the estimate of costs associated with the third judgment, nevertheless I have taken it into account in fixing the overall percentage of 80%. 24The Court therefore orders that the plaintiff pay the defendant a specified gross sum instead of assessed costs in the amount of $294,226.36. 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: 21 June 2013