In the matter of Mosman & Co Pty Limited

1. [1]

   This is an application by the plaintiff for a gross sum costs order pursuant to section 98(4)(c) of the Civil Procedure Act 2005 (NSW).

2. [2]

   On 5 September 2019, I found that the second defendant had engaged in oppressive conduct and ordered the second defendant to purchase the plaintiff’s shares in the first defendant company for $69,000 and for the defendants to pay the plaintiff’s directors loan of $45,120: In the matter of Mosman & Co Pty Limited [2019] NSWSC 1155. The defendants did not comply with these orders and judgments were entered against defendants in specific sums. The plaintiff has sought to enforce the judgment and orders through garnishee orders.

3. [3]

   In support of the application for a gross sum costs order, the plaintiff’s solicitor, Kerry Sidaway, has sworn an affidavit and exhibited the tax invoices rendered by solicitors, counsel and the joint expert together with invoices rendered for court filing fees, hearing fees and service fees as follows (including GST):

4. [4]

   In addition, the plaintiff has incurred additional costs and disbursements in the sum of $6,802.69 in his efforts to enforce the orders made.

5. [5]

   The plaintiff submitted that it was just and fair that the Court make a specified gross sum order, given the lack of any adherence to the Court’s orders by the defendants, or any received further communication by them. It was further submitted that the plaintiff’s costs have been accurately calculated and do not appear to have been inflated or unreasonably incurred, so that no injustice is caused to the defendants.

Whether appropriate to make lump sum costs order

1. [6]

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

2. [7]

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

3. [8]

   It is a relevant consideration “where 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) 215 ALR 788; [2005] FCA 228. That may be a relevant factor in this case, as Kenny J observed in Bitek Pty Ltd v iConnect Pty Ltd (2012) 290 ALR 288; [2012] FCA 506 at [17]:

4. [9]

   As I understand it, the defendants have not responded to the orders made thus far. This favours the award of a lump sum costs order thereby reducing wasted costs on any unnecessary costs assessment. I consider that this is an appropriate case to specify a gross sum instead of putting the plaintiff to the further time and expense involved in an assessment of his legal costs in circumstances where it is apparent that the defendants are unlikely to participate in that process; it is unclear whether the defendants have the ability to pay the costs order in any event; and, placing an additional burden on the plaintiff to undertake a costs assessment process may be for no useful purpose.

Fixing a sum

1. [10]

   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]:

2. [11]

   His Honour’s summary has been cited with approval in the Court of Appeal: Hamod v New South Wales [2011] NSWCA 375 per Beazley JA, with whom Giles and Whealy JJA agreed, at [793]. Her Honour continued, at [816]:

3. [12]

   And at [820] (citations omitted):

4. [13]

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

Consideration

1. [14]

   The solicitor’s invoices total $70,814.70. Counsel’s hourly rate is reasonable and the total fees are not disproportionate to the hearing. The expert’s fees for a valuation report were $2,871, which appears reasonable, and only half of the fee is sought.

2. [15]

   However, the costs order made in September 2019 was not an indemnity costs order. Thus, I will discount the solicitors and counsel’s fees to estimate what they would recover on an assessment on a party and party basis. I have discounted the solicitor’s fees by 25% and counsel’s fees by 10%, leaving disbursements in full. The total thus arrived at is $103,280 including GST.

3. [16]

   For these reasons I make the following order:

   1. (1)

      Order pursuant to section 98(4)(c) of the Civil Procedure Act 2005 (NSW) that the plaintiff is to be entitled to a specified gross sum in the amount of $103,280 including GST in respect of his costs of these proceedings.