Uber BV & Anor v Howarth

Service on the Defendant

1. The first matter to be established is that the defendant has been served with the motion and affidavits before the Court. That is made out through admissions based on two groups of e-mails.
2. I am satisfied that by virtue of a copy of an e-mail of 27 April 2017 at 5.21pm (Exhibit B) that Mr Hanna served Mr Howarth by e-mail with the motion and his own affidavit on 27 April 2017.
3. The motion came before the Court for directions on 31 May 2017. As a result of directions made on that date the plaintiffs attempted to serve the defendant at an e-mail address which he has used in the course of the proceedings.
4. On Friday 9 June 2017 Mr Hanna, the solicitor for plaintiffs, e-mailed the defendant at 10.50am at an e-mail address that I am satisfied the defendant uses, indicating that he had a folder of material relating to the application for a lump sum costs application to lump sum "to serve on you". In this email Mr Hanna referred to previous difficulties the plaintiff had encountered in serving material on the defendant at his address at Bowral. He asked, "Can you please advise whether you still reside at the Bowral address and, if so, what time you will be there to receive the folder? Either way I will scan and e-mail you a copy of the material."
5. On Friday, 9 June 2017 the plaintiffs forwarded by email the affidavits of Heidi Heathcote (together with the exhibit to her affidavit) together with their outline of written submissions to Mr Howarth.
6. I am satisfied that when Mr Howarth received the communications of 9 June 2017 that he had been served with the motion and its primary supporting materials. In response to the plaintiffs' e-mail of 9 June Mr Howarth replied by e-mail dated 15 June at 4.57pm confirming service of that material upon him saying, "Consider me derved" (sic). I take judicial notice of the fact that the key for 'd' and the key for 's' are very close to one another on the standard keyboard. I infer he is saying, with slight finger error, "Consider me served". He then goes on to say, "I don't check e-mails very often any longer. Am I required to attend court? Regards Russell".
7. Then on 31 May 2017 my Associate wrote to the parties. She said to them, "Please find attached copy of the orders his Honour made today. Please note the listed date for the costs hearing". A copy of the orders, as set out below, was also provided. "His Honour makes the following orders or directions: 1. Direct the plaintiffs to file (by providing to my Associate) and serve any affidavit in evidence and written submissions in support of the specified gross sum costs order by 4pm on 9 June 2017 2. Direct the defendant to file (by providing to my Associate) and serve any evidence and submissions in reply by 4pm on 23 June 2017 3. Fix the matter for hearing on costs at 9.30am on Tuesday, 4 July 2017. 4. Further direct the plaintiffs to notify the defendant of the making of these orders by 4pm today."
8. In reply to that e-mail, on 3 July, that is yesterday, Mr Howarth replied: "Dear Associate, I will not be able to attend court tomorrow at 9.30am. I could send a couple of points that I would have raised were I there. If that is agreeable I shall send them through before 4.00pm today. I am not seeking an adjournment. The other side has already pointed out that a judgment will be pressed whether or not I am in attendance. Regards, Russell."
9. In response to that, my Associate yesterday responded to Mr Howarth, copied to the solicitor for the plaintiff, "Dear Mr Howarth, your e-mail has been received and noted".
10. I am satisfied on the basis of the above material: that Mr Howarth has been served with all the materials now adduced in evidence before the Court on the motion; and, also that he is fully aware of today's hearing date.

Applicable Legal Principles

1. The applicable law may be shortly stated. The Court's power to make a specified gross sum costs order instead of assessed costs was established in New South Wales Supreme Court rules by 1970: Supreme Court Rules 1970. These rules were initially enacted as the Fourth Schedule to the Supreme Court Act No. 52, 1970. Part 52, Rule 6(2)(c) of the Fourth Schedule was in turn based on a rule to similar effect in the English Rules of the Supreme Court (Revised in 1965) Order 62 Rule 9 (4) (b) "Fractional or gross sum in place of taxed costs". One early example of the application of the English predecessor is Silva v Czarnikow Limited (1960) 104 SJ 369 in which, after an action lasting eight days, the managing clerk for the defendant's solicitor estimated the total legal costs at over GBP 2,000 and the judge fixed under O 62 r 9(4)(b) a gross sum in lieu of assessed costs at GBP 1,250. But reported Australian case law on the topic of specified gross sum costs orders is scant until the early to mid-1990s, when in cases such as Beach Petroleum NL v Johnson (No. 2) (1995) 57 FCR 119 (von Doussa J), judge began to commonly apply analogous provisions. Part 52A (Costs) was inserted into the Supreme Court Rules 1970 in 1994, which provided in what was rule 6(2) that the Court could make a gross sum costs order. This Part was repealed in 2005, upon the passing of the Civil Procedure Act.
2. But Courts have long exercised the power to fix a specified gross sum instead of assessed costs as part of the Court's broad costs discretion, without the need for specific authorising rules. One early example of the High Court exercising such jurisdiction is Edgar & Walker v Mead (1916) 23 CLR 29 in which Isaacs J (at 46) applied the practice adopted and described by Jessel MR in Willmott v Barber (1881) 17 Ch D 772: "But taking everything into consideration, including the several findings in favour of the respective parties, and realizing the desirability of putting an end to unnecessary further expense, I act on the principle laid down or recognized by the Court of Appeal in Willmott v. Barber. It was there stated that the discretion of the Judge as to costs is very large and extends even to the course which Jessel M.R. said he sometimes adopted, and generally found the parties were grateful to him for so doing. He thus described the course: "fix a definite sum for one party to pay to the other, so as to avoid the expense of taxation, taking care in doing so to fix a smaller sum than the party would have to pay if the costs were taxed."
3. In New South Wales this Court's specified gross sum costs jurisdiction is now embodied in Civil Procedure Act, s 98(4)(c) which relevantly provides as follows: "(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.
4. It is to be noted that the jurisdiction is only available before a matter is referred for the assessment of costs. Referral to costs assessment has not occurred in this case so the specified gross sum costs jurisdiction is available.
5. The principles for the making of specified gross sum costs orders instead of assessed costs are now well settled. Civil Procedure Act, s 98(4)(c) 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 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 (No. 2) (1995) 57 FCR 119 (von Doussa J).
6. Probable 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) 54 NSWLR 738; [2002] NSWCA 213 ("Schipp") at [21] (Giles JA) and Hadid v Lenfest Communications Inc [2000] FCA 628 ("Hadid") (Lehane J).
7. How 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."
8. I summarised the law regarding the powers available in Civil Procedure Act, s 98(4)(c) in Simone Starr-Diamond v Talus Diamond (No. 4) [2013] NSWSC 81.

Should a Gross Sum Costs Order be made in this Case?

1. This is an apt case for the making of a gross sum costs order. Mr Howarth is an undischarged bankrupt. That alone would probably be a sound basis for making an order such as this. But other factors in this case weigh in favour of the Court making such an order, on the basis that it is highly likely that the successful plaintiffs will be further aggravated here by having to fund the additional costs of a taxation, which costs are likely to be unrecoverable. That is the principal basis on which the Court now acts to make the orders sought.
2. The defendant stated to the Court, for example, in a pre-trial directions hearing on 20 December 2016, "Unless I have a lawyer, which is almost impossible given my current predicament, I won't be submitting an amended cross-claim," indicating his inability to afford a lawyer.
3. In the course of his submissions on 6 February 2017 the defendant was asked whether he could have brought a private criminal prosecution without having to make arrests himself. He said, "I guess if I had the money, a private prosecution would have been a good way to go, your Honour." He made similar statements on several other occasions in the course of the proceedings. These statements are admissions further confirming the defendant's probable lack of funds to meet the costs of an assessments of costs.
4. But a costs assessment would probably be protracted in this case. It is likely that the defendant will continue to be unrepresented during the costs assessment process. He has acted for himself for some considerable time already throughout these proceedings. He parted ways with his lawyers, Messrs Turner Freeman, at an early stage in the proceedings in circumstances which are consistent with them not having been paid their fees for acting for him. When acting for himself in the past, the Court's records show that the defendant, as a self-represented litigant, has on several occasions, despite indulgences, failed to comply with Court deadlines and caused the proceedings to be adjourned.
5. The defendant has also contested matters which, had he been legally represented, it is likely that he would not have contested: for example, the continuation of interlocutory injunctions and putting in issue some of the matters which were found against him in the Court's principal judgment, such as responsibility for the tweets, which the evidence strongly indicated circumstantially were either authored by him, or for which he had taken responsibility: see the first judgment at [20] to [22].
6. It is Mr Hanna's assessment, which I accept is accurate, that he expects that, "Should this matter go through the costs assessment process, there will be a significant amount of delay and additional work that I will be required to perform."
7. Mr Hanna also states, and I accept as accurate, his judgment of the probable effect at the end of a costs assessment of the defendant's current financial position: "Due to the defendant's apparent impecuniosity, I expect the plaintiff will be unable to recover the costs of any additional work which I would be required to perform in order to comply with the costs assessment process". The plaintiffs' various memoranda of fees and bills of costs in evidence show a sufficient degree of complexity for it to be said with confidence that the costs assessment process will not be short.
8. For all these reasons, in my view this is a textbook example of the exercise of the Court's beneficial jurisdiction to make a specified gross sum costs order. One should be made in this case.

What is the Appropriate Quantum of the Order?

1. At the Court's direction, the plaintiffs set out all the invoices and memoranda for the professional fees that solicitors and counsel rendered to the plaintiffs in the proceedings, together with other disbursements. The plaintiffs then provided schedules totaling these invoices and memoranda. They are all in Exhibit HH1 to Ms Heathcote's affidavit.
2. The Court has had an opportunity to peruse all of the documents in Exhibit HH1 to Ms Heathcote's affidavit. The total amount claimed is apportioned among solicitors, counsel and general disbursements as follows: Solicitors' professional fees $195,651.50 Counsel's fees $433,564.68 Other disbursements $32,325.57 And the total of all of these is $661,541.75
3. I am satisfied on the basis of the invoices contained within Ms Heathcote's exhibit that these sums have indeed been incurred. I am satisfied not only because she says in her affidavit that they were incurred, but looking at the documents it is clear from the Court's own knowledge of the history of the proceedings that the various memoranda of fees relate very closely to the kind of work the Court would expect to have been done at various stages of these proceedings.
4. At this stage the Court must satisfy itself that the amount claimed is fair in the circumstances. The Court does not consider the amount of $661,541.75 as the total amount of costs to be unreasonable for this case. A brief survey of the course of the proceedings shows why this is so.
5. Between the time the proceedings were commenced on 1 July 2015 and the time judgment was reserved on 7 February 2017, the proceedings came before the Court on at least 27 separate occasions. They did so for varying lengths of time ranging from the length of a directions hearing to virtually full day interlocutory hearings.
6. One can gather the flavour of these appearances from the helpful summary of the course of proceedings that appears in Mr Hanna's affidavit of 27 April 2017. He explains that after the plaintiffs originally filed their Summons for interlocutory relief against the defendant before Brereton J sitting in the Duty List, his Honour granted an interlocutory injunction on that day on an ex parte basis. The matter then came back before the Court quickly on a number of occasions, 3 July 2015 before Brereton J once again, and then on 17 July 2015 before Bergin CJ in Equity (as her Honour then was).
7. Then between mid-August and mid-December, another eight appearances took place before Sackar J, to deal with a range of issues including alleged deficiencies in the pleadings due to want of parties, applications for adjournment by the defendant to consider the form of the cross-claim he wished to file, legal representatives of the defendant indicating that they were ceasing to act in October 2015, adjournments being sought for the inability of the defendant to attend on the appointed day, adjournments by the defendant to attempt to obtain a new solicitor, an application by the defendant to turn the proceedings into international proceedings, the effect of the passing of the Passenger Transport Amendment (Taxi and Hire Cars) Regulation 2015 on the proceeding and in particular on the cross-claim which the defendant then had on foot, and an application by the defendant to be released from his undertaking to file an amendment to the cross-claim.
8. Between December 2015 and the matter coming to me for directions in December 2016, there were appearances before Stevenson J, Registrar Walton, Kunc J and Registrar Hedge on approximately another 12 occasions, dealing principally with pleading issues concerning the cross-claim and the possible referring of the proceedings to mediation. This period was characterized by the defendant's failure to file a cross-claim and applications by him to have further time to file an amended cross-claim. Some of those issues were still being debated when the matter first came before me on 20 December 2016.
9. This history is its own testament to the inherent complexities in the preparation of these matters for hearing such as would warrant commensurate costs and charges of the order of those being claimed, including of course the cost of the two-day hearing earlier this year.
10. There is no suggestion in my view that any of the costs incurred were excessive in the circumstances. Therefore in my view common discounts can comfortably be applied here as to the percentage of the total costs claimed that would probably be recoverable were there to be a full assessment of costs.
11. What are those common discounts? Mr Hanna says, and I accept as accurate, that in his experience, "A party awarded costs on the ordinary basis would after assessment normally receive an amount in the range of two-thirds to three-quarters of the actual costs, with a higher proportion of counsel's fees being recovered on assessment and solicitors' fees". It is indeed the Court's experience of these matters that when it comes to counsel's fees, Mr Hanna's evidence is even an understatement. It is not unknown for counsel fees to be recovered almost in their entirety and treated more or less as undiscounted disbursements.
12. The amount sought in the plaintiffs' motion is fair and appropriate in the circumstances for three main reasons. First, counsels' fees alone (at $433,564.68) are larger than the amount that the plaintiffs now seek to recover by way of a specified gross sum (at $391,152.27). Assuming counsel's fees are in large part recoverable, that is a single strong indicator that the amount sought here as a specified gross sum is not excessive.
13. Secondly, at just under 60% of total costs incurred the amount sought is conservatively and comfortably below the two-thirds, three-quarters discount range for costs recovery that Mr Hanna has identified.
14. Thirdly, the final total of the plaintiffs' legal costs specified in Ms Heathcote's affidavit does not include the costs of this motion itself, which are not being pressed.
15. For those reasons, the $391,152.27 is an appropriate specified gross sum to fix in these proceedings, instead of assessed costs, pursuant to s 98(4)(c) of the Civil Procedure Act.

Conclusion and Orders

1. Accordingly, the Court makes the following orders and directions: 1. Order the defendant pay the plaintiffs a specified gross sum in the amount of $391,152.27 instead of the referral for assessment of the costs ordered in Order 3 made on 3 April 2017.

Amendments 07 July 2017 - Correct heading style 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 July 2017