Edward Moses Obeid Snr v David Andrew Ipp (Costs)

HIS HONOUR: This judgment follows upon the principal judgment delivered on 27 September 2016, Edward Moses Obeid Snr -v- David Andrew Ipp [2016] NSWSC 1376, and my judgment as to costs which determined that the plaintiffs were to pay the first defendant’s costs on the indemnity basis and the costs of the second, third, fourth, sixth, and seventh defendants on the ordinary basis: Edward Moses Obeid Snr v David Andrew Ipp [2017] NSWSC 271 (the Costs Judgment).

Section 98(4)(c) of the Civil Procedure Act 2005 (NSW) provides:

The parties agreed that the Court should make such an order, that the Court should fix the amount, and that this should be done on the papers.

Einstein J pointed out in Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 at [9] that a gross sum assessment, by its very nature, does not envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place, and the gross sum can only be fixed broadly having regard to the information before the Court.

A broad brush approach can be taken provided it is logical, fair, and reasonable: see Baychek v Baychek [2010] NSWSC 987 and, more recently, In the matter of Mosman & Co Pty Limited [2020] NSWSC 1245 and the authorities cited in those decisions.

A broad brush approach is particularly apt to be taken here where there are multiple parties and the proceedings are complex.

The Court had the benefit of extensive reports from two experienced professional costs assessors, Sharon Lea Drew for the plaintiffs and Ian Ramsey-Stewart for the defendants. On my request, the parties provided brief written submissions which highlighted the experts’ differences in approach.

Ms Drew’s assessment identified the following range of the costs likely recoverable by each defendant on assessment. Cents are omitted.

Mr Ramsey-Stewart’s opinion is that the likely recoverable costs would total $3,800,830 plus GST (i.e. $4,180,913).

A significant difference between them is that, although they both examined costs on a line-by-line basis and then applied a percentage discount after examining factors which would cause a costs assessor to reduce costs, Mr Ramsay-Stewart then applied a further reduction to take account of what he considers would occur during the actual costs assessment process. He would also disallow certain specific items which he considered were unnecessary and unreasonable work caused by duplication and for some “incompletely described work.” Mr Ramsey-Stewart did not, however, directly review the specific invoices in question.

The defendants say that Mr Ramsey-Stewart’s methodology appears to be in accordance with the practice and taxation of costs in the Federal Court, where, they point out, there is a restricted fee schedule which may consideration of what would be awarded on taxation different to that which may be awarded on assessment.

Mr Ramsey-Stewart would disallow a certain amount of costs claimed in the solicitors’ invoices because they are administrative in nature or overheads which would be expected to be absorbed by the solicitor.

I prefer Ms Drew’s approach. I think her low range figure is closer to that which would be recoverable on assessment in this jurisdiction, especially given the complexity of the case. Her approach is logical, fair, and reasonable.

However, that having been said, the dispute was not only complex but multi-party and there is some room to think, from my own observation of the trial, that on assessment there might be a further reduction because of duplication. I think that the appropriate further reduction is 5%.

The Court orders that the defendants are entitled to the following specified gross sums instead of assessed costs (exclusive of interest). The figures have been rounded out.

I have already determined that the defendants are entitled to interest on their costs and the basis upon which it is to be calculated: see Costs Judgment at [22]. Calculations will be required. The parties are to bring in Short Minutes reflecting this outcome.