Cowap v Cowap (No 2)

I heard these proceedings over four days, 19 to 22 August 2019.

At the conclusion of the hearing I delivered ex tempore reasons: Cowap v Cowap [2019] NSWSC 1104 (the “Principal Judgment”). These reasons should be read with the Principal Judgment and defined terms in the Principal Judgment have the same meaning in this judgment.

The outcome of the Principal Judgment was that provision should be made for Nick from his late father’s notional estate in the sum of $600,000. I made directions for the parties to bring in short minutes to give effect to the Principal Judgment including, if they could reach agreement, as to costs.

I heard argument as to the form of orders on 2 October 2019. The only aspect of the orders not resolved on that day was Nick’s application for a gross sum costs order, including for indemnity costs. However, at the conclusion of the argument I gave the parties a preliminary indication of my views and encouraged them to see if they could resolve the question of costs. To their credit, they have now done so and I will make orders to give effect to that. Nevertheless, especially as it appears these proceedings will go further, it seems to me appropriate to deliver these short reasons to explain the background to this outcome.

When these proceedings were originally commenced on 15 December 2017, Nick was represented by Mr George Szabo, solicitor. Mr Szabo ceased to act for Nick on 11 May 2018.

Mr Szabo had retained Mr K F Morrissey of Counsel. The evidence before me on Nick’s costs application included a letter from Mr Morrissey to Mr Szabo dated 18 April 2018, which referred to a conference that had happened the previous day. Mr Morrissey’s letter included:

This offer (the “April Offer”) was implicitly rejected on 2 May 2018 when a counter offer was made on behalf of Barbara to pay Nick $10,000 inclusive of costs. There was no other evidence as to the terms of the April Offer and neither party suggested the Court should find that it was made other than in the terms recorded by Mr Morrissey in his letter.

After Mr Szabo had ceased to act, Nick was without legal representation for nearly a year, except for some limited assistance from a pro bono barrister.

Nick’s current solicitor, Mr Youssef Maksisi, came on the record in March 2019. He retained Ms J E Treherne of Counsel.

The signal feature of this aspect of the proceedings is that Mr Maksisi (including his employed solicitor Ms Afraz) and Ms Treherne entered into conditional costs agreements with Nick, capping their costs at an hourly rate of $180 plus GST and with no uplift for success. Mr Maksisi’s usual rate is $400-$500 per hour plus GST, Ms Afraz is usually charged out at $300 per hour plus GST and Ms Treherne’s usual hourly rate is $250 plus GST. It will be apparent that Nick’s lawyers undertook this matter at a significant discount to their usual rates. In the course of an exchange with Ms Pringle, who again appeared for Barbara, I observed that hourly rates of $180 plus GST “in the experience of the Court are more than reasonable. They are very much at the lower end of the spectrum”. Ms Pringle replied “I accept that” (T12:13-16).

Nick originally sought this gross sum costs order:

The application for indemnity costs was made on the basis that Barbara had unreasonably rejected the April Offer. Alternatively, Nick relied on what was described as Barbara’s “relevant delinquency”, being her allegedly unreasonable refusal to engage in any meaningful settlement discussions up to and including the first day of the hearing before me. It is unnecessary for me to record the facts behind that submission.

Updating Nick’s costs to include his costs in relation to the argument as to final orders and costs, the amount claimed by him became $92,166.02, calculated as:

There was no dispute that it was appropriate for the Court to make a gross sum costs order. However, Ms Pringle (who, for good reason, had not come prepared to meet the gross sum costs application) sought an opportunity to file further evidence and submissions as to costs. I allowed until 9 October 2019 for that to occur, with submissions in reply on behalf of Nick to be filed and served by 16 October 2019.

However, having heard Ms Treherne’s submissions in relation to indemnity costs, I shared with the parties my preliminary view that there was unlikely to be a practical difference even if a gross sum costs order were made with the current lawyers’ costs being assessed on the indemnity basis. This was because, given the very modest basis for the calculation of those costs, I would not be inclined to make any discount either to reflect costs on the ordinary basis or the additional discount often allowed for when a gross sum costs order is made. I also made clear that those observations did not extend to Mr Szabo’s costs.

I formally reserved on the question of costs subject to receiving the additional evidence and submissions, but encouraged the parties to see if they could reach agreement in the meantime.

On 10 October 2019 my Associate received this email from Nick’s solicitors:

I have assumed those figures are inclusive of GST. Nick’s solicitors subsequently indicated that they did not take issue with a gross sum costs order for that amount - $85,304.62 - being made by the Court.

A gross sum costs order in that amount will be made accordingly. I had originally been of the view that an order for further provision from the estate might be made in relation to those costs, but in the circumstances of this case (where Barbara is otherwise the sole beneficiary), there is no need to make an order for further provision in relation to those costs, or in relation to Barbara’s costs. The practical reality is that she will have to meet both her own and Nick’s costs from her own resources, including what she inherited from her late husband to the extent it has not been included in the notional estate order which I made on 2 October 2019.