Quach v Horvath (No 2)

1. [1]

   HER HONOUR: On 1 November 2021, I delivered judgment in Quach v Horvarth [2021] NSWSC 1401. I shall refer to Professor Horvarth as Dr Horvarth in this judgment as that is how he was named in the amended statement of claim. I ordered that the amended summons filed 27 May 2021 be dismissed. I also made an order that to minimise costs I would deal with the issue of costs on the papers in chambers.

2. [2]

   I made the following directions regarding the party’s submissions on costs:

3. [3]

   On 15 November 2021, the defendant filed a notice of motion seeking costs in his favour and that a lump sum costs order be made. The defendant’s submissions on costs as well as the affidavit of his solicitor Nicholas Regener (“Mr Regener”) dated 15 November 2021 (“Regener Aff 15/11/21”) were also filed.

4. [4]

   The plaintiff sought an extension of time to file and serve his submissions, which was granted to 14 January 2022. On 14 January 2022, I received the plaintiff’s submissions in reply. I now have both parties’ submissions.

The appropriate legal principles

1. [5]

   The starting point in relation to costs is s 98 of the Civil Procedure Act 2005 (NSW) (“CPA”). It relevantly reads:

2. [6]

   Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) 42.1, 42.20(1) and 42.26 are also relevant. They read:

3. [7]

   An order for a gross costs sum is particularly appropriate where costs have been incurred as it is desirable to avoid the expense, delay and aggravation or futility likely to be involved in a contested or extensive costs assessment. That desirability may arise from the likelihood that the additional costs of formal assessment would disadvantage the successful party because of the potential inability of the unsuccessful party to pay the costs in any event: Harrison v Schipp (2002) 54 NSWLR 738 at 743-4 (“Harrison”).

4. [8]

   The assessment of any lump sum to be awarded must represent a review of the successful parties costs by reference to the pleadings and complexity of the issues raised on the pleadings, the interlocutory processes, the preparation for final hearing and the final hearing: Smoothpool v Pickering [2001] SASC 131 at [12].

5. [9]

   The power to award a gross sum 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 [1996] NSWCA 552; BC9600215 at 35-6 (“Wentworth”).

6. [10]

   The approach taken to estimate costs must be logical, fair and reasonable. Reasonable assessment of the costs incurred and properly recoverable may involve an impressionistic discount of the costs actually incurred or estimated, to take into account the contingencies that would be relevant in any formal costs assessment.

7. [11]

   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). It may be necessary, and it is at least desirable, for the costs claimed to involve a degree of particularity about the way in which the total costs have been calculated. This may involve evidence of the nature and amount of the rates involved.

8. [12]

   However the exercise of its discretion the Court is not required to undertake a detailed examination of the kind that would be appropriate to taxation or to a formal costs assessment: see Harrison at 743. Indeed descending into the level of detail required on taxation or formal costs assessment defeats the purpose of a gross sum order.

9. [13]

   In Sedgwick v Varzonek (No. 2) [2015] NSWSC 1613, Slattery J relevantly stated at [34]-[36]:

10. [14]

    In Fan v South Eastern Sydney Local Health District (No 3) [2015] NSWSC 1620, I relevantly stated at [32]-[38]:

11. [15]

    The defendant’s submissions began by noting that on 1 November 2021 this Court dismissed the plaintiff’s claim on various bases including that:

    1. (1)

       he was either out of time, or the discretion to extend time should not be granted;

    2. (2)

       the defendant was not the correct defendant because the decision he wanted to challenge was that of the NSW Medical Board.

12. [16]

    The defendant relied on Mr Regener’s affidavit affirmed on 4 June 2021 (“Regener Aff 4/6/21”) and submitted that the evidence it contains demonstrates that the defendant pointed the plaintiff to the deficiencies in his case on 10 May 2021 (Annexure A), 14 May 2021 (Annexure B), and 30 May 2021 (Annexure C) and urged him to discontinue. The defendant noted that the bases on which this Court dismissed the plaintiff’s claim noted above, were raised with the defendant in those emails.

13. [17]

    The defendant submitted that to the extent that the plaintiff continues to feel aggrieved, one of the purposes of the rule in relation to the award of a gross sum of costs is to avoid aggravation arising out of taxation. Correspondingly the defendant submitted it should not now be taxed by having to proceed with the costs assessment process with a plaintiff who would not accept reasonable arguments put to him in correspondence.

14. [18]

    Finally the defendant submitted that there is a pressing need in the interests of all parties in these proceedings to bring the consequential (ie the costs) aspects of the proceedings to a rapid conclusion. Correspondingly the matter ought not be permitted to go to a lengthy costs assessment over a relatively small sum with the plaintiffs' own liability to pay costs remaining uncertain.

15. [19]

    The defendant relied on Regener Aff 15/11/21. The defendant noted that Mr Regener was admitted as a solicitor on 21 May 2010 (at [3]), and set out the legal costs incurred in the running of the defendant’s case and annexed a number of supporting invoices (Regener Aff 15/11/21 at [8]-[22]; Annexures A-G).

16. [20]

    The defendant submitted that evidence contained in Regener Aff 15/11/21 demonstrates the reasonableness of the fees charged, while acknowledging the benefits to both parties and that some of the time spent by the solicitors for the defendant may have not been “reasonable”. This is because some additional time was spent researching complex historical legal issues and due to the involvement of 2 insurers. The defendant further submitted that its legal services providers rates are well below commercial value, noting the comments of Adamson J in Bechara v Bates (No 4) [2015] NSWSC 1722 at [13]-[15] that a charge out rate of $400.00 was reasonable.

17. [21]

    The defendant set out its solicitor’s costs (exclusive of GST) as follows:

18. [22]

    Mr David Hume, the barrister who acted for the defendant in these proceedings and who appeared at the hearing, incurred fees of $4187.50 (exclusive of GST): Regener Aff 15/11/21 at [18]. Annexed to Regener Aff 15/11/21 are two invoices for those fees, the first dated 11 September 2021 for the sum of $1,500 (Annexure E) and the second dated 9 November 2021 for the sum of $2,687.50 (Annexure F).

19. [23]

    Disbursements of $1,141.00, comprising of a transcript ($293.00) and the filing fees of two notices of motion ($848.00) were also incurred: Regener Aff 15/11/21 at [19]-[21]. All legal costs and disbursements have been paid: Regener Aff 15/11/21 at [24].

20. [24]

    The total sum of legal costs and disbursements claimed by the defendant is in the sum of in $17815.40: Regener Aff 15/11/21 at [22]. The defendant noted it has reduced his claim for costs to $11,153.20. This reduction is in reflection of a reduction of:

21. [25]

    The defendant does not believe there is a reason to discount the disbursements which it submits were all reasonably incurred: Regener Aff 15/11/21 at [29]

22. [26]

    The plaintiff submitted that he objects to paying the sum of $11,153.20 on the basis that here is no evidence that defendant had incurred any costs. The plaintiff submitted that the amount claimed ($11,153.20) reflects costs incurred by the insurance companies, under the Insurance Contract Act 1984 (Cth).

23. [27]

    The plaintiff pointed to the Re JJT; Ex parte Victoria Legal Aid [1998] HCA 44 in which it was stated at [41(1)] that:

24. [28]

    The plaintiff submitted that he had initiated a private prosecution under the Medical Practices Act 1992 (NSW) as at 19 January 1999 (“MPA”), and as such the “source of power” to make an order for costs is to be found under s 13 of that Act.

25. [29]

    The plaintiff submitted that as at 19 January 1999 s 13 read:

26. [30]

    In reliance on s 13 of the MPA the plaintiff submitted that the CPA has no application in this matter.

27. [31]

    The plaintiff submitted that pursuant to s 13 of the MPA, the ordinary meaning of “Tribunal can award costs,” means the Medical Tribunal formed under the MPA and does not mean the Supreme Court which the plaintiff noted was formed under the Supreme Court Act 1970 (NSW) (“SCA”). He further submitted that a judicial officer cannot be a party to the proceeding and order costs, where there is no power for the Supreme Court to order Costs under the SCA.

28. [32]

    The plaintiff further submitted that in s 13 of the MPA it is explicitly expressed that the “Tribunal” may order to “pay such costs to such person”. He correspondingly submitted that the ordinary meaning of “person” does not mean non-parties, such as corporations, insurance companies nor any other persons.

29. [33]

    The plaintiff continued by submitting that there is no power to order costs at common law to corporations, such as insurance companies like United Medical Protection and iCare.

30. [34]

    The plaintiff concluded his submissions by stating that there is no source of power for the Supreme Court to order costs in this matter. The respondent’s Notice of Motion should be dismissed, with Costs in favour of the Applicant.

Resolution

1. [35]

   Before proceedings to my resolution of this matter it should be noted that the earliest version of the MPA which I am able to access on the NSW Legislation Website is at 13 March 2001 (“13 March 01 version”). I note that the solicitor for the defendant deposes he had the same issue in Regener Aff 4/6/21 at [7].

2. [36]

   Section 13 in the 13 March 01 version deals with the requirement that applicants to the medical profession must be competent and of good character. As noted by Mr Regener in Regener Aff 4/6/21 at [6], on 19 January 1999 the defendant gave notice to the plaintiff that an inquiry was to be held pursuant to ‘Schedule 1 of the MPA’. I note that s 13 of Schedule 1 of the 13 March 01 version deals with the medical practitioner’s entitlement to attend an inquiry.

3. [37]

   It is unclear whether the section quoted by the plaintiff is indeed the section that was in force in the MPA as at 19 January 1999, however ultimately it does not matter. The plaintiff, as he did at the hearing, submitted that he has the right to commence a private prosecution against the defendant under the MPA. As previously stated in Quach v Horvarth [2021] NSWSC 1401 at [89], the MPA has been repealed and it no longer has any statutory force. In answer, the plaintiff may say that he has a right to commence a private prosecution under the Health Care Complaints Act 1993 (NSW). He does not. A private criminal prosecution can be commenced under the Criminal Procedure Act 1986 (NSW), however, in order to do so there has to be an alleged criminal offence. There has not been one. The plaintiff commenced proceedings in this Court. Therefore, the CPA and the UCPR apply.

4. [38]

   Costs are discretionary. Normally costs follow the event. As the plaintiff was unsuccessful in these proceedings, and in applying UCPR 42.21 and 42.20, the plaintiff should pay the defendants costs. I make that order.

5. [39]

   The defendant seeks an order for a lump sum costs order. Dr Horvarth incurred the costs of $17,815.40 defending the plaintiffs claim seeking judicial review. It was agreed by iCare that since the proceeding concerned Dr Horvarth’s position as President of the NSW Medical Board it was appropriate for it to indemnify him. Although costs were incurred by Dr Horvarth, the named defendant, they were paid for by iCare.

6. [40]

   As previously stated, a gross sum costs order is appropriate in matters where it is desirable to avoid the expense, delay and aggravation or futility likely to be involved in contested or extensive costs assessment. That desirability may arise from the likelihood that the additional costs of formal assessment would disadvantage the successful party: Harrison at 743-4.

7. [41]

   The power to award a gross sum 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 at 35-6; Harrison. The approach taken to estimate costs must be logical, fair and reasonable.

8. [42]

   The solicitor for the defendant wrote to the plaintiff on 10 May 2021, 14 May 2021 and 30 May 2021 pointing out the deficiencies in his summons and requested that Dr Quach discontinue the proceedings. He did not do so.

9. [43]

   I have set out the costs incurred by the defendant earlier in this judgment. Dr Quach has not provided any evidence that he in a financial position to pay these costs. It is desirable to avoid the potential for further expense, delay and aggravation likely to be involved in a contested costs assessment. The award of a gross sum costs order does justice to both parties. In these circumstances, it is my view that an order for a gross costs sum should be made.

10. [44]

    There is detailed evidence by the defendant’s solicitor of the actual costs and disbursements that have been incurred and paid. The defendant has reduced its claimed costs from $17,815.40 to $11,153.20. I am satisfied that this is a reasonable sum for the defendant’s costs and disbursements. Hence I make an order that the plaintiff pay the defendant’s gross lump sum of $11,153.20 for costs.

    1. (1)

       The plaintiff is to pay the defendant’s costs of the proceedings.

    2. (2)

       The plaintiff is to pay the defendant the lump sum costs of $11,153.20.