I gave judgment in this matter on 8 February 2016: Stankovic v State of NSW [2016] NSWSC 18. I ordered that the proceedings should be dismissed and that the Plaintiff should pay the Defendants' costs. After publication of my reasons the Defendants applied that the costs should be payable by a lump sum costs order. The parties agreed directions for the service of evidence and written submissions. The application was listed for hearing before me on 17 March 2016.
On that day counsel for the Defendants sought to read an affidavit of Bruce Cantrill sworn 22 February 2016. Mr Stankovic objected saying that he had only been given a copy of the affidavit in Court that morning. Further enquiry by me disclosed that the affidavit had been served in accordance with the directions both by posting it to P O Box 92, Castle Hill, NSW, 2154 and by email to Mr Stankovic at the contact email address appearing on all documents filed by him. The post office box was the address identified in the Statement of Claim as being his address. Mr Stankovic said that he had not accessed his emails and did not deny that the document had been sent to his post office box. In those circumstances I said that I would read the affidavit.
No evidence was put forward by Mr Stankovic.
The affidavit from Mr Cantrill set out both in the body of the affidavit and the detailed annexure the work performed by the Crown Solicitor acting for the Defendants. It set out the charge rates for those persons in the Crown Solicitor's Office who had worked on the matter. It deposed to the incurring by the Defendants of costs to date, including counsel's fees at $19,392.50 with an estimate of costs in relation to the hearing of the present application of $3,260. The total costs were, therefore, $22,652.50.
Mr Cantrill is a very experienced solicitor who has worked as a solicitor in the Crown Solicitor's Office for 27 years. He says that in that time he has become aware of matters in which costs incurred by the Crown Solicitor have been referred for assessment of party/party costs. Based on Mr Cantrill's knowledge he estimated that the Defendants are likely to have their costs assessed in an amount of approximately 90% of solicitor/client costs.
I accept Mr Cantrill's evidence and his expertise.
Section 98 Civil Procedure Act 2005 (NSW) relevantly provides:
(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.
…
(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.
…
The Defendants submitted in accordance with various authorities that the present case was an appropriate one for the making of a lump sum costs order. The Defendants submitted that the purpose of the Rule was to avoid expense, delay and the aggravation of a costs assessment process. The probable inability of a party to pay a costs order is an important consideration for the making of a lump sum costs order so that the other party is not put to wasted time and expense of the costs assessment process.
The Plaintiff submitted that not only should no lump sum costs order be made but that no costs order at all should be made because he was intending to appeal against my judgment. Since I have already made an order that the Plaintiff pay the Defendants' costs I took the submission to be one that I should not make any further order in relation to costs pending the outcome of the appeal.
The remainder of the Plaintiff's submissions again dealt with the substantive matters that I dealt with in my earlier judgment. I endeavoured on a number of occasions to direct the Plaintiff to a consideration of whether a lump sum costs order should be made but without success.
In Harrison & Anor v Schipp [2002] NSWCA 213; (2002) 54 NSWLR 738 Giles JA said of the earlier equivalent provision to s 98(4) (Pt 52A r 6(2) Supreme Court Rules 1970 (NSW)):
[21] The power conferred by r 6(2) is not confined, and may be exercised whenever the circumstances warrant its exercise. It may appropriately be exercised where the assessment of costs would be protracted and expensive, and in particular if it appears that the party obliged to pay the costs would not be able to meet a liability of the order likely to result from the assessment (Leary v Leary (1987) 1 WLR 72; Sparnon v Apand Pty Ltd (von Doussa J, 4 March 1998, unreported); Beach Petroleum NL v Johnson (1995) 57 FCR 119; Hadid v Lenfest Communications Inc [2000] FCA 628).
[22] Of its nature, specification of a gross sum is not the result of a process of taxation or assessment of costs. As was said in Beach Petroleum NL v Johnson at 124, the gross sum "can only be fixed broadly having regard to the information before the Court"; in Hadid v Lenfest Communications Inc at [35] it was said that the evidence enabled fixing a gross sum "only if I apply a much broader brush than would be applied on taxation, but that … is what the rule contemplates". The approach taken to estimate costs must be logical, fair and reasonable (Beach Petroleum NL v Johnson at 123; Hadid v Lenfest Communications Inc at [27]). 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 (Wentworth v Wentworth (CA, 21 February 1996, unreported, per Clarke JA).
In Hamod v State of New South Wales and Anor [2011] NSWCA 375 Beazley JA (with whom Giles and Whealy JJA agreed) said:
[813] I have already set out the relevant provisions of s 98. 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 [[2007] NSWSC 23]; Lorenzato v Lorenzato & Anor (No 2) [ 2011] NSWSC 790 per Black J.
…
[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 [[1999] FCA 673; (1999) 93 FCR 1 at [15]] (emphasis added)
Although some of the authorities including Hamod and Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 have noted that the gross sum costs procedure was particularly useful in complex cases, other authorities have made it clear that the old Rule (now s 98(4)(c)) is expressed in general terms and is not limited to cases of that type: Australasian Performing Rights Association Ltd v Marlin [1999] FCA 1006; Simone Starr-Diamond v Talus Diamond (No. 4) [2013] NSWSC 811 at [8] and Bobb v Wombat Securities Pty Ltd & Ors (No 2) [2013] NSWSC 863 at [6].
The evidence in the present case tends to suggest that there will be a probable inability on the Plaintiff's part to pay any costs order. The Plaintiff has on a number of occasions referred to himself as being penniless and living on the street with the support of a disability pension only. The Defendants acted quickly to bring the present proceedings to an end. I do not consider that it would be appropriate for the parties to go through a costs assessment exercise which would be disproportionate to the speed with which the present proceedings have been brought to an end.
The further issue to be determined is the precise sum that the Plaintiff should pay. When assessing the costs for the purpose of making a gross sum order a broad brush approach may be taken: Zepinic v Chateau Constructions (Aust) Ltd (No 2) [2014] NSWCA 99 at [31] and [38]; Hamod v State of New South Wales (No 13) [2009] NSWSC 756 at [31]; see also Hamod (Court of Appeal) at [819]-[820] and Young v Hones (No 3) [2014] NSWSC 499 at [28]-[30].
The cases to which my attention has been drawn and some others show a range of discounts on the costs figure which has been established. So, for example, in Attorney General in and for the State of NSW v Bar-Mordecai [2013] NSWSC 1307 Schmidt J appears to have reduced the costs by 10% (at [16]). The Court of Appeal in Harrison v Schipp took a similar approach at [51]. In Simone Star Diamond Slattery J allowed 80% and in Coshott v Parker (No 3) [2015] NSWSC 1195 Hall J at [78] allowed 70%. This discount is not only concerned with the relationship between solicitor/client costs and party/party costs but also with contingencies relevant to a costs assessment process: Hamod (CA) at [814] and [820].
In my opinion the appropriate order is that the Plaintiff should pay the Defendants' costs in the sum of $18,122 being 80% of the total costs incurred by the Defendants. This amount includes the costs of the present application in which the Plaintiff was unsuccessful.
I make the following order:
Vary order 3 made by me on 8 February 2016 to provide:
The Plaintiff should pay the Defendants' costs in the sum of $18,122.
[3]
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: 07 April 2016