By notice of motion filed on 19 November 2023, LCC Property Development Pty Ltd, the first defendant in these proceedings, seeks a gross sum costs order on the ordinary basis against the first plaintiff, Winau Australia Pty Ltd, the second plaintiff, Shunjiyuan Investments Pty Ltd, and the fourth plaintiff, Junde Hong, (Respondents) in the amount of $120,000 or such other amount as the Court considers appropriate. For the reasons which follow, the Court will make that order, albeit in a higher amount to reflect the unchallenged expert evidence relied upon by LCC.
The motion also seeks an order that $50,000 paid into court on behalf of the first, second and fourth plaintiffs on or about 1 February 2023 by way of security for the first defendant's costs be paid out of court to the first defendant in partial satisfaction of those plaintiffs' liability for the first defendant's costs. When this motion was before me for directions on an earlier occasion in the Applications List, I made an order that the money in court be paid out to LCC. That has occurred.
Mr N Li, of Counsel, appeared today for LCC. Ms Grace Yuan, an officer of Winau, sought leave to appear for the Respondents. Leave was granted unopposed.
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The Respondents
The Court acknowledges with gratitude the assistance it has received from Mr Li's careful and thorough outline of submissions dated 5 December 2023, as supplemented by argument today.
I am satisfied that those submissions, together with all the evidence relied upon, was served on the Respondents. The Court has received a two-volume court book. Ms Yuan acknowledged that she had received that court book, but that she had left it on her office shelf without ever bothering to read it, although I have no doubt she understood it related to the motion.
For her part, Ms Yuan sent to my chambers two written submissions opposing the relief sought in the motion. Those submissions are a two page submission dated 26 January 2024 and a shorter submission dated 1 March 2024. Those submissions are, with respect to Ms Yuan, not easy to follow. I infer from something Ms Yuan told me that she had originally written them in Mandarin and they have been translated by Google Translate. The burden of those submissions, nevertheless, I take to be that the respondents say that $50,000 had been provided by way of security and that is sufficient.
I asked Ms Yuan if she needed an interpreter. She replied that if I spoke slowly and clearly, she would be able to follow what I said. I am satisfied by what I have seen and heard today that Ms Yuan understands both what was happening today as a formal matter of what was being sought, and that she was adequately able to follow proceedings and to make such submissions as she wished, notwithstanding that English is obviously not her first language.
In the course of addressing the Court, the only other matter that Ms Yuan raised in addition to what is in her written submissions in opposition to the motion was that the Respondents would be unable to pay anything more than the $50,000 that has already been paid out of Court. That, with respect, is not a sufficient answer to the motion if the Court is otherwise satisfied that the relief should be granted.
That having been said, this is a clear case for the making of a gross sum costs order for the following reasons.
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Why the gross sum costs order will be made
On 9 November 2023, McGrath J dismissed these proceedings for want of prosecution on the part of the Respondents: Winau Aust Pty Ltd v LCC Property Development Pty Ltd [2023] NSWSC 1355.
I gratefully incorporate by reference into these reasons his Honour's comprehensive recitation of the entirely unsatisfactory way in which the Respondents have conducted this litigation. His Honour summarised their conduct:
"7. The motion comes after the plaintiffs have punctuated the progress of the proceedings with various stops and starts involving repeated amendments to their claims, multiple changes of their legal representatives, unexplained failures to adhere to directed timetables and a recent apparent attitude of languid indifference as to whether the proceedings progress at all."
The Respondents' indifference to their own proceedings may be taken to have reached its apotheosis by their failure to attend before McGrath J to resist the proceedings being dismissed. Be that as it may, Ms Yuan has appeared today for the Respondents to resist the relief sought by LCC in relation to its costs.
LCC is the beneficiary of a number of costs orders made at various points in the history of the proceedings. For present purposes, those earlier costs orders were overtaken by the order made by McGrath J on 9 November in dismissing the proceedings and ordering that the Respondents pay LCC's costs of the proceedings.
There was no dispute about the applicable principles for the making of a costs order assessed by the Court as a gross sum, all of which were thoroughly set out in Mr Li's submissions and which it is unnecessary for me to recite here.
The corporate Respondents are controlled by persons ordinarily resident outside of Australia. Ms Yuan informed me that she is the controller of Winau and lives in Hong Kong. The other Respondent, Mr Hong, is a natural person ordinarily residing outside of Australia. The fact that, in effect, all of the Respondents are offshore parties is the first of several reasons in favour of making of the gross sum costs order.
The next reason is the history of the conduct of the proceedings themselves as set out in McGrath J's judgment. Proceedings that have been dismissed for want of prosecution will generally be, as in the case at bar, an archetypal example of a case in which a gross sum costs order should be made. Delay and dereliction in the conduct of proceedings clearly satisfies the test for making a gross sum costs order to the effect that a party should not be committed to the time and expense of an assessment of costs where the costs respondent, it may be inferred from their earlier conduct, is likely to delay and not be cooperative in the assessment.
The Court has no hesitation in making that inference in these proceedings. I accept Mr Li's submission that such an inference is even easier to draw in this case by reference to the Respondents' minimalist approach to this application, notwithstanding that, for example, they have two other sets of proceedings currently on foot (one in each of this Court and the District Court) in which they are legally represented.
The next factor which weighs in favour of making the gross sum costs order is the very real doubt as to the capacity of any of the Respondents to satisfy the order for costs. Ms Yuan has admitted as much from the bar table. That is another very strong reason why LCC should not be put to the trouble and expense of having to quantify its claim through an assessment process.
Next, insofar as LCC has been required to incur the relevant costs at all in the proceedings, that may be laid fairly and squarely at the door of the Respondents. The history set out in McGrath J's judgment demonstrates that LCC has been required to incur costs over a five year period as a result of what might be considered to be interminable spinning of wheels by the Respondents in attempting to run their case but, in fact, going nowhere.
The final reason why the order should be made is that the Court can be well satisfied that the amount claimed is fair and reasonable by reference to the evidence. The high point of the detailed evidence in the court books is a detailed assessment of LCC's costs by a well-qualified costs assessor and solicitor, Mr Ian Ramsey-Stewart.
I have thoroughly reviewed Mr Ramsey-Stewart's affidavit. No evidence challenging any aspect of the motion, let alone challenging Mr Ramsey- Stewart's conclusions, has been led on behalf of the Respondents. Whilst that in itself is a significant matter in favour of LCC, it does not relieve the Court from being satisfied that the material advanced by LCC justifies the making of the order sought.
Mr Ramsey-Stewart's analysis demonstrates, and I accept, that the matter was run efficiently and leanly on the part of LCC, and that the professional charge out rates of those involved were, to quote Mr Ramsey-Stewart, "generally below market rates charged on a practitioner/client basis". For that reason he was of the view that those rates did not need to be adjusted.
Mr Ramsey-Stewart then carefully considered the costs that had been incurred. He identified two matters that were not referrable to the proceedings and made appropriate deductions from the amounts charged in respect of those matters. He then considered the costs that were referrable to the orders of which LCC was the beneficiary and made a 75% deduction in respect of professional costs and a 5% reduction in respect of counsel's fees. The Court accepts those deductions as entirely appropriate. Mr Ramsey Stewart allowed 100% of the disbursements.
Based on Mr Ramsey-Stewart's evidence, LCC seeks orders reflecting the full amount calculated by him: $133,329 in respect of the proceedings and $20,100 in respect of LCC's costs of the motion.
The only matter which has given me any real pause for thought is whether or not some further discount should be made as sometimes is the case where a gross sum costs order is made. Mr Li submitted that this was not a case in which that should occur, not least because the Court had the benefit of Mr Ramsey-Stewart's thorough analysis without any contradiction, and taking into account that the Respondents had never suggested that they would have preferred the matter to goes to a costs assessment.
There will be cases in which a further discount will be made, over and above the deductions made to reflect what might be allowed on assessment. In many such cases the Court does not have the advantage of a detailed costs assessment of the kind that has been provided in this case through Mr Ramsey- Stewart's report. Considerations of cost and proportionality can mean that less detailed evidence as to the costs incurred by a costs applicant will suffice. Such cases are typical (but not the only) examples of where the Court may make a further deduction to reflect the more general character of the evidence upon which it has to rely, and to reduce the risk of injustice to a costs respondent by reason of the more "broad brush" approach which the Court will generally adopt.
This is not such a case. I accept Mr Li's submission that the fair and detailed nature of the material that has been presented, especially through Mr Ramsey-Stewart's report, together with the failure of the Respondents to make any attempt to traverse it, mean that the Court can be well satisfied that no further deduction would be required to ameliorate any potential unfairness (if there be such) to the Respondents in the gross sum assessment process.
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Conclusion
For these reasons, the Court will make orders in accordance with the short minutes handed up by Mr Li:
The Court notes that:
On 20 December 2023, $50,000 paid by the first, second and fourth plaintiffs into court for security for the first defendant's costs was released to the first defendant.
The Court orders that:
Pursuant to section 98(4)(c) of the Civil Procedure Act 2005 (NSW), the liability of the first, second and fourth plaintiffs to the first defendant in respect of the costs orders made on 15 October 2021, 16 September 2022, 11 July 2022, 12 September 2023, 17 October 2023 and 9 November 2023 be fixed in the sum of $133,329.
The $50,000 released to the first defendant on 20 December 2023 be taken to be part payment of the costs ordered in order 1.
The first, second and fourth plaintiffs pay the first defendant's costs of the first defendant's motion dated 17 November 2023 fixed in the sum of $20,100.
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Decision last updated: 05 March 2024