Lake Maintenance (NSW) Pty Limited v Todd Hadley Pty Limited & Ors (No 2)

1. [1]

   HER HONOUR: On 22 March 2019 the Court made orders dismissing a Notice of Motion filed by the defendant on 20 November 2018, making the following orders as to costs:

2. [2]

   On 28 March 2019 the plaintiff filed an affidavit affirmed by Andrew Kendall McLeod on 27 March 2019, together with submissions in support of a variation to order (2) of 22 March 2019. The plaintiff seeks an order for fixed sum costs of the Motion in its favour, payable within 28 days of the date of any orders.

3. [3]

   Mr McLeod is the solicitor for the plaintiff. He deposes that he has long experience of commercial litigation and is familiar with its cost.

4. [4]

   After the hearing of the Motion, Mr McLeod rendered an invoice to the plaintiff, which included the costs of the Motion, being solicitor’s and counsel’s fees, and disbursements. On the basis that any award of costs on a party/party basis would likely be assessed at 65% - 70% of the overall costs incurred, his estimate of the party/party costs incidental to the Motion is a sum of between $36,758.16 and $39,585.71.

5. [5]

   It is the lesser of these two sums, together with GST, that the plaintiff asks be awarded to it pursuant to s 98(1) of the Civil Procedure Act 2005 (NSW) (“the CP Act”) and r 42.1 of the Uniform Civil Procedure Rules 2005 (“UCPR”), payable within a specified timeframe.

6. [6]

   The plaintiff argues that the defendant’s Motion was made “in the teeth of” decisions such as Wardley Australia Limited v Western Australia (1992) 175 CLR 514 at [533], and despite receiving correspondence from the plaintiff, urging it not to move on the foreshadowed Motion, and providing detailed reasons as to why the defendant should not proceed with that course.

7. [7]

   It is submitted that, in circumstances where no case management advantage followed the determination of the Motion, it should not have been brought.

8. [8]

   Finally, the plaintiff points to the disadvantage to it of being obliged to wait for payment of its costs until the resolution of the overall proceedings at some distant time, and then to bear the further delay, and expense, associated with any taxation process. According to Mr McLeod, the latter is likely to be in the order of some 5 to 6 months and a cost of about $5,000.

9. [9]

   By submissions filed on 5 April 2018 the defendant argues that the plaintiff’s application for an order for costs in a specified gross sum payable forthwith should be refused. It contends that the proper order is for the costs to be the plaintiff’s costs in the cause.

10. [10]

    The defendant submits that there is no exceptional circumstance to justify departure from the ordinary procedure enshrined in r 42.7(2) UCPR for costs to be payable at the conclusion of the proceedings. An order for lump sum costs payable at this stage of proceedings is, the defendant contends, exceptional, and would involve the Court in an inquiry as to the reasonableness of the sum claimed, in circumstances where “a rationalisation of the costs orders can be explored as part of the assessment and agreement process” which will follow the litigation. The Court was referred to In the Matter of Ji Woo International Education Centre Pty Ltd [2019] NSWSC 338 at [12]-[14], and Saba v Plumb [2017] NSWSC 955 at [23].

Consideration

1. [11]

   Section 98 of the CP Act relevantly provides:

2. [12]

   Section 60 of the CP Act is also relevant. It is in these terms:

3. [13]

   Part 42 of the UCPR deals with costs. Rule 42.7 provides:

4. [14]

   The power provided by s 98 of the CP Act is a broad discretionary power, subject only to rules of court and any relevant legislation, and to the judicial exercise of the discretion. Whilst there is no question but that the Court has the power to make an order in the nature of that sought by the plaintiff, it could only be made on the basis of a proper factual foundation, and in accordance with legal principle: Sherborne Estate (No 2); Vanvalen v Neaves 65 NSWLR 268; [2005] NSWSC 1003 at [38] per Palmer J.

5. [15]

   Rule 42.7 recognises that, although what might be referred to as the usual costs order can be displaced by a specific order, costs will ordinarily become payable at the finalisation of the proceedings. Thus, an order for costs in a specific sum, payable forthwith, represents a departure from the usual position contemplated by r 47.2(2).

6. [16]

   Having considered the affidavit evidence and submissions of the parties, I am not persuaded that there is any reason for this matter to be distinguished by a specific sum costs order.

7. [17]

   Significantly, such an order would obviate the role of costs assessment, as was noted by Palmer J in Sherborne (No 2) at [37]-[38]:

8. [18]

   Although the plaintiff submits that a reason to make the order is to by-pass the expensive and time consuming process of costs assessment, doing so would also deprive the defendant of the potential protection of independent assessment, particularly in circumstances where, as here, the defendant disputes the reasonableness of the claimed costs.

9. [19]

   Where there is no agreement as to the reasonableness and fairness of the sum claimed, there is no reason to conclude that the Court is in a better position to assess the quantum than an assessor.

10. [20]

    Whilst the plaintiff is dismissive of the merits of the defendant’s Notice of Motion, I did not regard it as a hopeless application by any means. Indeed, had there been any realistic prospect of a separate limitation question proceeding on the basis of agreed facts pursuant to s 191 of the Evidence Act 1995 (NSW) as the defendant submitted it should, determination of the separate question might have, at least, disposed of one aspect of the defence, if not disposed of the litigation altogether. There is no basis upon which to conclude that the defendant’s application was made otherwise than in good faith, and with at least reasonable prospects of success.

11. [21]

    This matter does not have any of the features of litigation where a specific sum costs order might be likely to be made, such as an impecunious plaintiff (Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (2006) 236 ALR 665; [2006] FCA 1427 at [122]); or a claim that the cost of assessment would be greatly disproportionate to the quantum of the overall claim (Kiwi Munchies v Stern [2006] NSWSC 433), here in the millions.

12. [22]

    Finally, this is an interlocutory matter where the plaintiff’s ultimate success is not inevitable: an order that abides the final resolution of the dispute is indicated. The costs order should be that the costs are the plaintiff’s costs in the cause.

13. [23]

    The Court orders that:

    1. (1)

       Order (2) of 22 March 2019 is varied, as follows: The costs of the Notice of Motion of 20 November 2018 are the plaintiff’s costs in the cause.