Spencer v Coshott

Spencer v Coshott - [2021] NSWCA 266 - NSWCA 2021 case summary — Zoe

Judgment

THE COURT: Judgment in this matter was given on 8 October 2021: Spencer v Coshott [2021] NSWCA 235 ("the principal judgment"). The Court reserved to the parties the opportunity to provide additional evidence and submissions in respect of costs by, in the case of Mr Spencer, 15 October 2021 and, in the case of Mr Coshott, 22 October 2021.
Within the specified time Mr Spencer provided an affidavit sworn by Marcus McCarthy on 15 October 2021, and written submissions. He provided a further affidavit sworn by Mr McCarthy on 18 October 2021. Mr Spencer seeks an order that Mr Coshott pay his costs of the proceeding in this Court, and the proceeding in the District Court, and a further order, pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW) that the costs payable be in a specified gross sum (instead of as assessed).
No evidence or submissions were received from Mr Coshott within the time allowed. During the afternoon of 3 November the Court received, by email, an outline of submissions. Mr Coshott did not dispute his liability to pay the costs to both proceedings, in each of which he was, by the orders made in respect of the principal judgment, unsuccessful. Two alternative propositions were advanced by Mr Coshott, the first being blanket opposition to a gross sum costs order. The alternative position was that, if such an order were to be made, the amount claimed by Mr Spencer should be significantly reduced (by 50%).
The history of the proceedings between these parties is set out in some detail in the principal judgment. It is unnecessary to repeat it. A brief summary will suffice. Since 2014 Mr Spencer and Mr Coshott have been locked in dispute about costs of a proceeding to which Mr Coshott was not a party. That dispute has been fought out in this Court, the District Court and the High Court. Various costs assessments have been made, which themselves have been subject to further disputation. In March 2019 Mr Coshott applied for assessment, under Pt 7 of the Legal Profession Uniform Law Application Act 2014 (NSW) ("the Uniform Law Application Act"), of costs ordered against him in 2017. He was dissatisfied with the assessment and (successfully) sought review by a review panel. Pursuant to s 83 of the Uniform Law Application Act Mr Spencer appealed, unsuccessfully, to the District Court against the certificate issued by the review panel. Pursuant to s 69 of the Supreme Court Act 1970 (NSW) Mr Spencer then sought, in this Court, judicial review of that determination ("the s 69 proceeding"). He was successful and the Court set aside both the orders of the District Court and two certificates issued by the review panel.
Even this succinct history demonstrates to a high degree that the interests of both parties, and the administration of justice (which includes the costs assessment regime, the District Court and this Court) will be served by the saga of litigation being brought to an end. That can sensibly be achieved by an order of the kind sought by Mr Spencer, that the outstanding costs be assessed as a gross sum. Mr Coshott, nevertheless, opposes such an order and proposes that the costs be assessed under the regime laid down by the Uniform Law Application Act.
Mr Spencer has at all relevant times been represented by Nexus Lawyers Pty Ltd ("Nexus") of which he is (and has been since March 2020) Group Principal. He was previously the principal and sole director and shareholder of Kejus Pty Ltd, which traded as Spencer & Co Legal. Spencer & Co Legal represented Mr Spencer in earlier stages of the litigation, but, in the litigation the subject of the present application (the statutory appeal to the District Court and the s 69 proceeding) he has been represented by Nexus.
Mr McCarthy deposed that he is "the director and principal" of Nexus. In his affidavits he quantifies the costs incurred by Mr Spencer in the District Court appeal, the s 69 proceeding and the current application for a gross sum costs order under s 98(4)(c) of the Civil Procedure Act. Annexed to Mr McCarthy's first affidavit are two Costs Disclosure Agreements, the first relating to the District Court proceeding, the second to the s 69 proceeding. The District Court Costs Disclosure Agreement estimated the professional costs to be incurred as $15,000 (exclusive of GST) with disbursements of $11,900 (also exclusive of GST). The Costs Disclosure Agreement with respect to the s 69 proceeding estimated the professional costs as $15,000 (exclusive of GST) and disbursements (being counsel's fees) as $12,500 (also exclusive of GST). The quoted hourly rate for a solicitor for the District Court proceeding was $500 (exclusive of GST); the quoted hourly rate for the s 69 proceeding was $550 for senior solicitors and $300 for junior solicitors (both exclusive of GST). Also annexed to Mr McCarthy's affidavit are invoices rendered by Nexus to Mr Spencer in respect of each proceeding, invoices from counsel and invoices in relation to disbursements.
The total (including disbursements and GST) of the costs invoiced to Mr Spencer in relation to the District Court proceeding is $33,418.25. The total (including disbursements and GST) of the costs invoiced in relation to the s 69 proceeding is $31,992.95. Each invoice contains a considerable amount of detail.
The submissions provided on behalf of Mr Spencer acknowledge that, when costs are specified as a gross sum, it is usual for a discount to be applied to the sum claimed. Discounts that have been applied are generally in the range of 15-30%. On behalf of Mr Spencer it was submitted that, there being no evidence of inflated costs that might result in disallowance or reduction on assessment, the discount applied in this case should be a modest 10%. Mr McCarthy deposed in his affidavit that the costs charged are commensurate with the hourly rates charged by lawyers of equivalent experience and seniority of himself and Mr Spencer and commonly allowed by costs assessors. He said that the time expended by a junior solicitor had been charged at $330 per hour (which, we note, is the rate disclosed in the Costs Disclosure Agreement, with an additional 10% to represent GST).
Mr McCarthy said that duplication or double charging had been avoided, where two solicitors had worked together, and that only the work of the senior solicitor had been charged. He also said that a significant amount of time that he had expended had not been charged.
The submissions belatedly filed on behalf of Mr Coshott cited pars [8]-[10] of the judgment of Beazley P and Basten JA in eInduct Systems Pty Ltd v 3D Safety Services Pty Ltd (No 2) [2015] NSWCA 422, apparently as support for Mr Coshott's position that, prima facie, costs ought to be assessed in accordance with the statutory regime, and to identify relevant considerations which were said, at [10] of eInduct, to include: 1. the complexity (and hence likely costs of) the assessment process; 2. if the costs of the assessment process are likely to be significant, whether they are likely to be unrecoverable; 3. the confidence with which the Court can estimate an approximate amount within reasonable limits; 4. the willingness of the applicant to discount the likely amount of costs recoverable on assessment, and 5. factors attending the particular application, including delay.
The submission dealt with each of those factors in turn. It was specifically submitted that the parties were equally responsible for the costs incurred, and that there was no suggestion that Mr Coshott had conducted the proceedings in a wasteful or protracted manner; it was further submitted that there was no suggestion that the costs of the assessment process would be likely to be significant or the costs become unrecoverable. We reject the first and second of these propositions, which are contradicted by the history, recounted in the principal judgment.
It was also submitted that the "issue litigated" was Mr Spencer's claim for costs of the original proceedings in sums of $91,374.82 and $2,539.35, and that the costs (a total of $62,021.98) claimed to litigate over those costs amounted to more than two thirds of the value of the "issue litigated" and were therefore disproportionately high.
This can only be described as a bold submission. The entire saga has been driven by Mr Coshott's insistence on challenging and litigating every costs order that has been made against him. It is unfortunate that he was able to persuade a review panel and the primary judge to accept the argument that we have found, in the principal judgment, to be untenable.
While the submissions relied heavily on the passages quoted from eInduct, they passed over the opening paragraphs of that judgment, in which Beazley P and Basten JA said: "3. There is a small though not insignificant number of cases in which disputes over costs appear to overwhelm the initial dispute between the parties. Pt 6 of the Civil Procedure Act requires that the Court give effect to the overriding purpose of the Act in rules of court, namely the facilitation of the just, quick and cheap resolution of the 'real issues' in the proceedings: s 56. Pt 6 also requires that in any proceedings the Court should seek to resolve the issues between the parties in such a way that 'the cost to the parties is proportionate to the importance and complexity of the subject matter in dispute'. It is clear that the 'subject matter in dispute' is to be distinguished from costs; it should also be accepted that the 'real issues' are so distinguished. 4. Civil litigation in the Supreme Court (and indeed in other courts) is neither free nor cheap. The parties will usually require the assistance of lawyers who, in the absence of legal aid, will almost invariably charge their respective clients for their services. Although the amount and liability to pay legal fees is undoubtedly of great significance to the parties, it should not be forgotten that there is a public interest in minimising unnecessary costs to the public purse through the provision of courts and other institutions to allow for the orderly settlement of civil disputes. To an extent it is no doubt inevitable that the system will breed disputes as to its own operation; nevertheless, as explained by the High Court in Expense Reduction Analyst Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [(2013) 250 CLR 303; [2013] HCA 46], defusing the pursuit of 'satellite interlocutory proceedings' is necessary to fulfil the overriding purpose under Pt 6 of the Civil Procedure Act. Expense Reduction concerned a dispute resulting from the inadvertent disclosure in the course of discovery of a document subject to client legal privilege. However, the same approach should apply with respect to the resolution of disputes as to costs."
As the history demonstrates, this is a paradigm example of a case in which the costs have overwhelmed the initial dispute (to which, as mentioned above, Mr Coshott was not a party). The observations in [3]-[4] in eInduct may well have been written with respect to the cost disputes between Mr Spencer and Mr Coshott.
Mr Coshott's submissions also drew attention to what was described as a discrepancy between the estimates contained in the Costs Disclosure Agreements, and those actually charged. When, however, GST is factored in, the discrepancy is diminished. Costs Disclosure Agreements are, and can be, no more than educated estimates.
We are satisfied that this is an appropriate case in which to utilise the procedure made available by s 98(4) of the Civil Procedure Act, for precisely the purpose for which that subsection was enacted. We therefore propose to make an order that the costs of both proceedings be payable as a gross sum.
Mr Coshott's submissions then turned to the invoices, which were subjected to minute scrutiny. Some items were identified as not obviously warranting the attention of a senior solicitor, charged at $500 or $550 per hour. One example given was an entry for perusing a Registry invoice for a hearing fee and subsequently attending to payment, for which $50 was charged.
It is not the role of this Court, in determining an application for a gross sum costs order, to constitute itself as a costs assessor. However, some of the points made on behalf of Mr Coshott appear to have some substance. We give only limited weight to Mr McCarthy's opinion that the costs claimed are within a range that could be expected on a costs assessment.
We are not satisfied that Mr Spencer's proposal (of a discount of 10%) adequately reflects the vicissitudes of assessment, particularly taking into account the attack made on the invoices by Mr Coshott. The purpose of a discount is to recognise the possibility, if not the likelihood, that some of the claimed costs might not be allowed or might be reduced. There is also some advantage in the speedy resolution of the process.
We propose to make a reduction of 30% from the costs claimed in each of the District Court proceeding and the s 69 proceeding. That would result in an order, in respect of the District Court proceeding, for costs in the gross sum of $23,392.78, and, in the case of the s 69 proceeding, $22,395.07.
Mr Spencer also claims the costs of the present application, quantified in Mr McCarthy's second affidavit at $4,289.25. We will apply a similar discount to those costs, resulting in a figure of $3,002.48. The orders we make, therefore, are: Pursuant to s 98(4)(c) of the Civil Procedure Act the respondent (Ronald Coshott) pay to the applicant (Keith Spencer): (i) in relation to the statutory appeal to the District Court, costs in the gross sum of $23,392.78; (ii) in relation to the judicial review proceeding in this Court, costs in the gross sum of $22,392.07; (iii) in relation to the application for gross sum costs, costs in the sum of $3,002.48.

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