Secure Logic Pty Limited v Paul William Noble (No.5)

This is the Court’s fifth judgment in these proceedings. The Court’s previous judgments are identified in the Court’s fourth judgment given on 5 October 2021: Secure Logic Pty Limited v Paul William Noble (No.4) [2021] NSWSC 1250 (“the fourth judgment”). This judgment should be read with the Court's previous judgments, particularly the fourth judgment. Events, matters and persons are referred to in this judgment in the same way as they are in the previous judgments.

In the Court’s fourth judgment, the Court settled the final form of the orders and made costs orders in the proceedings, which included the fixing of a specified gross sum instead of assessed costs under Civil Procedure Act 2005, s 98(4)(c). Orders (18) and (19) of those orders provided that the first and second defendants, Mr Noble and Peach Tree Bay, are respectively liable to pay 70% of the plaintiffs’ costs of the proceedings (including the First Cross-Claim) and that the amount payable by those two defendants in respect of such costs is $1,240,563.37, a sum fixed under s 98(4)(c). From that the offsetting figure of $166,299.11 on Mr Noble’s Cross-Claim is deducted to leave a net judgment against the first and second defendant of $1,074,264.26.

On 26 October 2021, the first and second defendants forwarded to the Court short written submissions questioning the basis of the Court’s calculations of costs in the fourth judgment. The relevant text of the first and second defendant’s submissions was brief and is set out below:

On 29 October 2021, Secure Logic took the opportunity to advance the following submissions in reply:

The Court has power to correct a clerical mistake or an error arising from an accidental slip or omission in a judgment or order and may correct the mistake on the application of a party or on its own motion: Uniform Civil Procedure Rules 2005, r 36.17. An omission or mistake should not be treated as accidental if the proposed amendment requires the exercise of independent discretion or is a matter upon which a real difference of opinion might exist: Storey & Keers Pty Ltd & Anor v Johnstone (1987) 9 NSWLR 446.

There is no occasion for the application of the slip rule here. The judgment entered against Mr Noble and Peach Tree Bay for $1,240,563.37 correctly gives effect to the Court’s intent. Mr Noble and Peach Tree Bay do not seek to point to a mistake or other error in the Court’s mathematical reasoning. The point that Mr Noble and Peach Tree Bay wish to take is really a challenge to the Court’s reasoning, which if pursued, can only properly be pursued on appeal.

Mr Noble and Peach Tree Bay criticised the Court’s choice of starting point for its reasoning, as Secure Logic’s total costs of $2,049,888.27 exclusive of GST. Mr Noble and Peach Tree Bay say that the starting point for Secure Logic’s claim for costs should be the gross sum of $1,425,164.75 exclusive of GST referred to in Mr Lacey’s affidavit of 22 June 2021.

If the Court were to start at $1,425,164.75, that would contradict the methodology adopted by the Court. Secure Logic’s figure of $1,425,164.75 (exclusive of GST) represented a compromise to take account of several factors. Mr Lacey’s affidavit of 22 June 2021 explained that this figure was reached on the basis that a costs assessment on the ordinary basis usually results in a costs determination of 60 – 80% of the professional fees incurred and 100% of disbursements including counsels’ fees. The gross sum amount, calculated by Mr Lacey, represented 55% of McCabes’ professional fees and 100% of disbursements on counsel, expert disbursements and other disbursements.

But the 55% discount in professional fees that Secure Logic proposed was not just to create a discount for the purposes of reaching a specified gross sum award, such a discount being a common, and indeed an invariable feature of such awards: Zepinic v Chateau Constructions Aust Limited (No. 2) [2014] NSWCA 99 at [38] (“Zepinic”). Rather, its 55% discount on professional fees was designed to encompass a range of potential costs outcomes, including that Mr Noble might be required to pay all the plaintiffs’ costs or that he may be required only to pay some lesser proportion of the plaintiffs’ costs on account of his partial success on the Cross-Claim.

The Court rejected the approach of a single all-inclusive discount encompassing these various potential costs outcomes to fix a specified gross sum. Instead the Court decided to fix a specified gross sum in two steps: first to work out what proportion of Secure Logic’s costs would not be recovered on an assessment of costs on account of Mr Noble’s success on his Cross-Claim; and then, and only then, to fix a final gross sum costs order including applying whatever discounts were appropriate to the making of such an order: cf the fourth judgment, at [99] – [102] and [104] – [108].

It would have been logically unfair to Secure Logic for the Court to commence its two step analysis at Secure Logic’s figure of $1,425,164.75, as that figure already included Secure Logic’s own discount for both of the first and second steps that the Court was about to consider. To start at $1,425,164.75 would in effect have meant discounting Secure Logic’s costs twice for the same factors.

Mr Noble’s present criticism also fails to give proper recognition to the first step of the Court’s alternative methodology which reduced Secure Logics’ claim for costs by 30% to reach a figure of $1,434,921.79. This figure is surprisingly close to (indeed within $10,000) of the “starting point” that Mr Noble is urging the Court to adopt. The Court then applied a discount of 20% to the professional fees component of that figure of $1,434,921.79 and otherwise allowed disbursements to reach the final figure of $1,240,563.37. The Court’s 20% discount at this second stage took proper account of the general requirement, in accordance with authority such as Zepinic, to apply a discount when making a specified gross sum order.

Mr Noble’s and Peach Tree Bay’s application to engage the slip rule here is dismissed. No fresh orders for costs will be made in respect of this application, which only involved submissions of one page of text from each side.