Huang v Drumm (No. 2)

1. [1]

   I gave judgment in this matter on 27 August 2018. I dismissed the plaintiff’s amended summons and ordered her to pay the defendant’s costs of the proceedings: Huang v Drumm [2018] NSWSC 1300.

2. [2]

   At the time of delivery of judgment, counsel for the defendant made an oral application that a gross sum costs order be made under s 98(4)(c) of the Civil Procedure Act 2005 (NSW). A timetable was proposed for the filing of submissions. I made directions for the filing of submissions and a direction that the application be dealt with on the papers. There was no appearance on that occasion for the plaintiff but she was subsequently notified of the application and the directions made.

3. [3]

   The defendant lodged his submissions in accordance with the directions. The plaintiff lodged her submissions 14 days after the time stipulated in the directions. I have, nevertheless, considered the plaintiff’s submissions as if they had been lodged in accordance with my directions.

4. [4]

   The defendant seeks a gross sum costs order in the sum of $35,900.

5. [5]

   An affidavit from the defendant’s solicitor acting on the appeal, Charles Thornley, summarised the interlocutory events from the time the plaintiff filed the summons to the time I heard the appeal. His affidavit also sets out details of the costs incurred on behalf of the defendant in the appeal proceedings. The affidavit also identifies other costs orders including amounts of gross sum costs orders and amounts assessed that are payable by the plaintiff. The affidavit identifies that the plaintiff only owns one piece of real property at 8 Catchet Court, Eight Mine Plains, Queensland. This property is subject to three mortgages.

6. [6]

   In the light of that evidence, the defendant submits that, in accordance with authorities such as Hamod v State of New South Wales and Anor [2011] NSWCA 375 and Bechara trading as Bechara and Company v Bates [2016] NSWCA 294 the circumstances surrounding the present litigation make it appropriate for a gross sum costs order.

7. [7]

   The defendant points to the following specific matters:

8. [8]

   The plaintiff filed submissions in reply together with an affidavit sworn by her on 19 September 2018. The affidavit was brief and, having noted that it was in support of the plaintiff’s opposition to the application for a gross sum costs order and to the amount that was sought, said only this:

9. [9]

   The submissions, on the other hand, consisted of 488 paragraphs over 112 pages. The bulk of the material was completely irrelevant to the present application. It consisted of a detailed history of the present claim in the Local Court and matters which occurred in various related proceedings. Some of the submissions seemed designed to suggest that Mr Thornley’s assessment of costs should not be accepted because he had grossly inflated costs in other matters with which the plaintiff had been concerned. The submissions made a large number of scandalous allegations against the plaintiff’s own lawyers who acted in the Local Court and in other proceedings, against the defendant’s solicitors and counsel in the Local Court proceedings and in the appeal to this Court, and against other persons.

10. [10]

    Doing the best I can with the morass of material set out in the plaintiff’s submissions, the following matters raised by the plaintiff appear to have some relevance to the present application.

Legal principles

1. [11]

   In Idoport Pty Limited v National Australia Bank Limited & Ors, Idoport Pty Limited v Donald Robert Argus [2007] NSWSC 23 Einstein J set out the principles which inform the exercise of the discretion to award a gross sum costs order at [9]:

2. [12]

   In Harrison & Anor v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 Giles JA said of the earlier equivalent provision to s 98(4) of the Civil Procedure Act 2005 (NSW) (Supreme Court Rules 1970 (NSW) pt 52A r 6(2)):

3. [13]

   In Hamod v State of New South Wales and Anor [2011] NSWCA 375 Beazley JA (with whom Giles and Whealy JJA agreed) said:

4. [14]

   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].

Determination

1. [15]

   In my opinion, the present matter is an entirely appropriate one for the making of a gross sum costs order for the following reasons.

2. [16]

   First, there can be no doubt that the costs of the Local Court proceedings and, indeed, the proceedings in this Court, were disproportionate to the amount in issue. I do not accept that the reason for that disproportion was any behaviour of the defendant or his lawyers. I noted in my earlier judgment at [95] that of the 15 days of hearing in the Local Court the plaintiff re-examined her own witness Mr Gibson over four days and cross-examined the defendant over five days. In my opinion, most of the unnecessary costs incurred in the Local Court were incurred by reason of the way the plaintiff conducted those proceedings.

3. [17]

   Secondly, the plaintiff conducted the proceedings in this Court in a manner which caused the incurring of unnecessary costs. The summons was filed on 30 November 2017. Directions took place before the Registrar on 28 February, 28 March, 6 April and 11 April 2018. On 11 April 2018 the proceedings were referred to the Duty Judge, Lonergan J, for show cause. The plaintiff did not appear as she was unwell. Justice Lonergan stood the matter over until 18 April 2018. In the meantime, the defendant filed a notice of motion seeking to dismiss the summons. On 18 April 2018 that motion was referred to the Duty Judge, N Adams J. Her Honour struck out 14 of the 17 grounds in relation to the Magistrate’s principal judgment on the basis that they did not disclose errors of law.

4. [18]

   The proceedings were fixed for hearing on 14 August 2018. On 9 August 2018 the plaintiff filed a notice of motion seeking an adjournment. That adjournment was refused by Fagan J on 10 August 2018. The plaintiff had not prepared the submissions she had been directed to prepare for the hearing.

5. [19]

   As I noted in my earlier judgment at [18], Fagan J informed the plaintiff that the appeal would be proceeding on 14 August 2018 and she should prepare her submissions. I then said at [19]:

6. [20]

   When the matter was called on for hearing before me on 14 August 2018, the plaintiff again sought an adjournment which I refused. The plaintiff had not prepared her written submissions but said that she was still working on them.

7. [21]

   When I delivered judgment on 27 August 2018, an application was made by the defendant for a gross sum costs order. I directed that the defendant was to file and serve any affidavit and submissions by 29 August 2018, the plaintiff was to file and serve any affidavit and submissions by 5 September 2018, and that the question of costs would be determined on the papers.

8. [22]

   The defendant duly served his affidavit and submissions on 29 August 2018. The plaintiff did not file her affidavit and submissions until 19 September 2018. Instead, she sent emails to my Associate, copied to the defendant’s solicitors on 4 September, 5 September (two emails), 6 September (two), 7 September, 11 September, 13 September (two) and 14 September with explanations why the submissions had not been filed.

9. [23]

   As I have said, the submissions extended to 488 paragraphs over 112 pages and in addition, contained two large ring binders of documents that, like the bulk of the material in the submissions, concerned what had gone on in the Local Court proceedings and in other related proceedings, but which were irrelevant to the present costs application.

10. [24]

    Thirdly, there is unchallenged evidence that costs owed by the plaintiff to the defendant totalling $119,949, which have either been assessed on a gross sum costs order basis or have been fixed following assessment have not been paid. In addition, there are two amounts of costs totalling $51,681.22, one of which was fixed following an assessment and one of which was assessed as a gross sum costs order, that are owing by the plaintiff to the defendant’s solicitor. In addition, an amount of $36,625.47 claimed by that solicitor has yet to be assessed. There was no new evidence as the plaintiff submitted, to justify her assertion that those costs orders might be set aside.

11. [25]

    Fourthly, the evidence tends to suggest that the plaintiff has few, if any, assets to meet the costs orders already made. I note that the plaintiff disclosed in her submissions that she had been served with a Bankruptcy Notice in 2017 and that the Federal Circuit Court extended the time for her to comply with that notice up to 4 July 2017. Nothing more is said about what eventuated with that Bankruptcy Notice apart from the fact that the plaintiff said that she intended to drop by the office of the creditor “to pay some funds on account”.

12. [26]

    I am entirely satisfied, on the basis of the way the plaintiff conducted the proceedings in the Local Court and conducted the proceedings in this Court, that a costs assessment process is likely to be lengthy, drawn out by the plaintiff and expensive for the defendant. The costs associated with that assessment process, especially when taken with the costs already incurred by the defendant in the Local Court proceedings and the proceedings in this Court, would be disproportionate to the amount in issue in the proceedings (see s 60 of the Civil Procedure Act). Further, the assessment process would not be one that facilitated the just, quick and cheap resolution of the costs issue (s 56 of the Civil Procedure Act).

13. [27]

    In her submissions, the plaintiff set out what is said to be a quotation from an unnamed judgment of Young AJA on 4 March 2016 as follows:

14. [28]

    I have not manage to find from which case this portion of his Honour’s reasons are extracted. However, accepting that the plaintiff has accurately recorded what his Honour said, although I agree, with respect, with Young AJA that a judge may well have been away from the costs process for some years, two matters should be said about that. First, my experience is that gross sum costs orders are made far more frequently now than was hitherto the case. There is considerable authority on the approach to such orders. It may be that the increasing use of such orders derives from ss 56 and 60 of the Civil Procedure Act. Secondly, it would be a brave judge who engaged in an assessment process himself or herself in the absence of evidence from solicitors with experience. In the present case I have evidence from a solicitor of more than 14 years’ experience. I also have the advantage of having been provided with a number of affidavits in recent times in various matters where gross sum costs orders have been sought. I am in a position to be able to say that the hourly rates identified by Mr Thornley in his affidavit accord generally with evidence I have received in a number of matters.

15. [29]

    The only challenge to Mr Thornley’s evidence is contained in general allegations made by the plaintiff in her submissions that Mr Thornley and his employed solicitors identified in his affidavit, have grossly inflated their fees in the past. No evidence of those assertions is provided.

16. [30]

    I am satisfied that I can place reliance on what appears in Mr Thornley’s affidavit.

17. [31]

    The affidavit of Mr Thornley sets out the costs of the defendant’s solicitors in assessable form. The total amount is $17,465 exclusive of GST. The total inclusive figure is $19,211.50. The rates charged of the various solicitors involved, varying between $155 per hour to $390 per hour are well within appropriate charge out rates bearing in mind the seniority of the solicitors involved. Indeed, I consider the rates to be modest.

18. [32]

    Counsel’s fees in relation to the proceedings in this Court, including for the present application total $16,660. Disbursements which included filing fees, the cost of transcript, the cost of printing the court book and a courier to send a copy of the court book to the plaintiff, totalled $5,360.85. I note in passing that, ordinarily, a plaintiff is responsible for obtaining and paying for the cost of transcript of the proceedings in the court below and for preparing the court book. Those matters were no doubt attended to by the defendant’s solicitors to ensure that the Court had all of the material it needed to hear the appeal, and to ensure that the defendant had all of the material necessary to argue the appeal. The total of these amounts is $39,486.

19. [33]

    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].

20. [34]

    It is ordinarily accepted that a discount should be provided on the costs figure which has been established. That discount is concerned not only with the relationship between solicitor/client costs and party/party costs but also with contingencies relevant to a costs assessment process: Hamod (Court of Appeal) at [814] and [820].

21. [35]

    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 Starr-Diamond Slattery J at [22] allowed 80%, and in Coshott v Parker (No 3) [2015] NSWSC 1195 Hall J at [78] allowed 70%. I allowed 80% in Stankovic v State of NSW (No. 2) [2016] NSWSC 335 at [17] and in Kostov v Nationwide News Pty Ltd (No.1) [2018] NSWSC 1822 at [103]. See also Ward CJ in Eq in Gupta v Fordham Laboratories Pty Ltd (No 2) [2018] NSWSC 694 at [31].

22. [36]

    The defendant accepts that a discount of 20% should be given in relation to the solicitor’s fees.

23. [37]

    As I have noted above, the discount is concerned with the relationship between solicitor/client costs and party/party costs as well as contingencies relevant to the costs assessment process. I have not held that the plaintiff should pay the defendant’s costs on an indemnity basis.

24. [38]

    Bearing in mind that a gross sum is being fixed for party/party costs and also that the photocopying charge of 50 cents per page seems high when it appears from Mr Thornley’s affidavit that the printing of the court book was done in-house, I would apply a discount to the solicitor’s costs of 25%. That produces a total, when added to counsel’s fees and disbursements, of $35,119.75.

25. [39]

    In my opinion, a gross sum costs order should be made in the amount of $35,000.00.

26. [40]

    I make this order: