Seven Network (Operations) Ltd v Dowling (No 3)

1. [1]

   HER HONOUR: On 21 June 2021, I found the defendant guilty of contempt: Seven Network (Operations) Ltd v Dowling [2021] NSWSC 726. On 13 August 2021, I ordered that the defendant pay the plaintiffs’ costs of the contempt motion on an indemnity basis, payable forthwith, and gave directions in respect of any application for gross sum costs.

2. [2]

   The plaintiffs seek a specified gross sum instead of assessed costs, under section 98(4)(c) of the Civil Procedure Act 2005 (NSW). In support of their application, the plaintiffs rely on an affidavit of their solicitor, Richard Keegan, and written submissions. The defendant relied on his written submissions.

3. [3]

   This judgment assumes familiarity with my earlier judgments in this matter being – in addition to the judgment mentioned at the outset – Seven Network (Operations) Ltd v Dowling [2018] NSWSC 1890 and Seven Network (Operations) Ltd v Dowling (No 2) [2021] NSWSC 1106.

Whether appropriate to make lump sum costs order

1. [4]

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

2. [5]

   A specified gross costs order involves a departure from the usual process by which costs are assessed in accordance with the statutory procedures now found in the Legal Profession Uniform Law (NSW): eInduct Systems Pty Ltd v 3D Safety Services Pty Ltd (No 2) [2015] NSWCA 422 at [8] per Beazley P and Basten JA. The power to make a specified gross sum costs order 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: Hamod v State of New South Wales [2011] NSWCA 375 at [813] per Beazley JA (Giles and Whealy JJA agreeing).

3. [6]

   As Giles JA noted in Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 at [21]:

4. [7]

   It is a relevant consideration whether “the financial capacity of the party liable to pay costs is such that the additional cost of taxation will impose a significant burden on the party in whose favour costs are ordered without real prospects of recovering those costs”: Dunstan v Human Rights and Equal Opportunity Commission (No 3) [2006] FCA 916 at [24], citing Hadid v Lenfest Communications Inc [2000] FCA 628; Sparnon v Apand Pty Ltd [1998] FCA 164; Sony Entertainment (Australia) Ltd v Smith [2005] FCA 228; (2005) 215 ALR 788. By way of example, Kenny J described the circumstances in which such an order was made in Bitek Pty Ltd v iConnect Pty Ltd [2012] FCA 506; (2012) 290 ALR 288 at [17]:

5. [8]

   The plaintiffs submitted that this case clearly falls within the description in Harrison v Schipp. The Court has already noted the prospect that Mr Dowling cannot or will not pay any costs: Seven Network (Operations) Ltd v Dowling (No 2) [2021] NSWSC 1106 at [89]. Whilst this did not mean that a costs order was futile nor that a lump sum order was inappropriate, it pointed to the appropriateness of reducing the complexity of the process of fixing the amount of costs payable. Further, such an order was appropriate where the other party's conduct has unnecessarily contributed to the costs of the proceedings: Hamod at [818]. This was just such a case, where Mr Dowling's conduct in disputing that he was the publisher of the offending material and, preceding that by conducting his acts of publication anonymously, very substantially contributed to the costs of the contempt motion.

6. [9]

   It is unclear whether Mr Dowling has the ability to pay the costs order. Placing an additional burden on the plaintiffs to undertake a costs assessment process may be for no useful purpose. I infer that Mr Dowling either cannot or will not pay the plaintiffs’ costs. This favours the award of a lump sum costs order, thereby reducing wasted costs on any unnecessary costs process. None of this should be taken to mean that Mr Dowling should not pay the plaintiffs’ costs. He has been ordered to do so, is liable to do so and should do so.

7. [10]

   I consider that this is an appropriate case to specify a gross sum instead of putting the plaintiffs to the further time and expense involved in an assessment of their legal costs in circumstances where it is readily apparent that Mr Dowling is unlikely to participate in a costs assessment in any meaningful or relevant way, if his written submissions on this application are anything to go by. In addition, as I have elsewhere observed, the defendant’s conduct substantially contributed to the costs incurred in prosecuting his contempt: Seven Network (Operations) Ltd v Dowling (No 2) [2021] NSWSC 1106 at [56]-[59].

Fixing a sum

1. [11]

   Where costs have been ordered on an indemnity basis, “all costs (other than those that appear to have been unreasonably incurred or appear to be of an unreasonable amount) are to be allowed”: rule 42.5(b), Uniform Civil Procedure Rules 2005 (NSW).

2. [12]

   In Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23, Einstein J summarised the principles which inform the exercise of the discretion to specify a gross sum, at [9]:

3. [13]

   His Honour’s summary has been cited with approval in the Court of Appeal: Hamod at [793]. Beazley JA continued, at [816]:

4. [14]

   And at [820] (citations omitted):

5. [15]

   Further, as Ball J explained in Baychek v Baychek [2010] NSWSC 987 at [11]:

6. [16]

   The courts have typically applied a discount in assessing costs on a gross sum basis: Hamod at [814]. A “broad brush” approach is appropriate. To require the same or similar level of detail as in a formal costs assessment would defeat the purpose of the lump sum order: Kostov v Zhang (No 2) [2016] NSWCA 279 at [27] per Meagher and Payne JJA.

Consideration

1. [17]

   The plaintiffs do not claim the costs associated with attending more than 20 directions hearings since the contempt motion was filed. Rather, the plaintiffs sought costs in respect of solicitor and counsels’ fees for preparation and settling evidence relied upon on the motion and appearing at substantive hearings, being before me on 27 September 2018, before Kunc J on 2 and 3 December 2019, the hearing of the contempt motion on 1 and 2 February 2021 and the hearing on 13 August 2021 when I heard submissions on sentence.

2. [18]

   In addition, the plaintiffs sought disbursements for the fees of the independent solicitor, Ms Sylvia Fernandez, whom I appointed in December 2018 (Seven Network (Operations) Ltd v Dowling [2018] NSWSC 1890); fees charged by expert witness Dr Bradley Schatz; together with court fees and filing fees.

3. [19]

   In total, the plaintiffs seek a lump sum costs order in the amount of $152,156.86, comprising solicitors’ fees of $55,911.00, counsel’s fees of $113,152.18 (noting that, by and large, senior counsel appeared without a junior) and the disbursements identified. Legal fees have been further discounted by 10%. Mr Keegan said that these costs and disbursements are significantly less than the plaintiffs’ total costs incurred. I expect that is the case.

4. [20]

   The plaintiffs submitted that their costs were sought on a conservative, even concessional, basis, and only in respect of matters at the heart of what was needed to pursue the contempt motion. The costs were appropriately incurred and the gross sum sought was appropriate in the circumstances.

5. [21]

   Mr Keegan’s affidavit provides a detailed breakdown of the costs, which are not challenged by the defendant. I am not persuaded that any of the costs have been unreasonably incurred or are of an unreasonable amount, noting that the onus is on the paying party to show this: Bouras v Grandelis (2005) 65 NSWLR 214; [2005] NSWCA 463 at [119] per Santow JA (Giles JA relevantly agreeing at [2]). The costs claimed are limited in scope and appropriately discounted given that the basis of assessment is on an indemnity basis.

6. [22]

   For these reasons, I am satisfied it is appropriate to make a specified gross sum order in the amount claimed by the plaintiffs. I make the following order:

   1. (1)

      Pursuant to section 98(4) of the Civil Procedure Act 2005 (NSW), order the defendant to pay the plaintiffs’ costs of the contempt motion filed on 21 July 2017 in the gross sum of $152,156.86.