De Rucci International Pty Ltd v Zhu and others (Costs)

1. [1]

   HER HONOUR: On 15 June 2021 the Court, sitting in the Duty List, heard the defendants’ Amended Notice of Motion filed 26 May 2021 seeking a stay of the enforcement of an earlier judgment of Rothman J of 2 December 2020 in De Rucci International Pty Ltd v Zhu & Ors [2020] NSWSC 1720. A previous motion filed by the defendants on 29 December 2020, also seeking a stay of enforcement of Rothman J’s judgment, was dealt with on 30 December 2021 by Cavanagh J and dismissed, with the first defendant required to pay the plaintiff’s costs of that motion: De Rucci International Pty Ltd v Zhu [2020] NSWSC 1927.

2. [2]

   In an ex tempore judgment delivered at the conclusion of the hearing, the Court dismissed the amended stay motion and ordered costs against the defendants / applicants on the usual basis, subject to any application from the plaintiff / respondent for a different order: De Rucci International Pty Ltd v Zhu and others [2021] NSWSC 1108. Pursuant to that order, and in compliance with the timetable then set, the plaintiff / respondent filed an application for a gross sum costs order, in the amount of $13,000. Evidence and submissions were also filed and served.

3. [3]

   Any response from the defendants / applicants was to be filed and served by 9 July 2021, but nothing has been received by the Court. On 25 August 2021 a Notice of Ceasing to Act for each of the defendants in the proceedings was filed by the solicitors formerly on the record for them.

4. [4]

   In support of the application the plaintiff / respondent relies upon the affidavit of Vincent Zhiqing Zhu, solicitor for the plaintiff, affirmed on 28 June 2021.

5. [5]

   Mr Zhu has detailed his client’s claim for the costs of defending the amended motion, which total $15,174.50 inclusive of tax. The affidavit also calculates appropriate discounts to the legal fees incurred and sets out applicable disbursements.

6. [6]

   Mr Zhu is concerned that the defendants will not pay a usual costs order, as they have failed to do so on each occasion on which such an order has been made to date, and the plaintiff / respondent is yet to recover any costs ordered in its favour.

7. [7]

   Mr Zhu’s experience suggests that, were the costs of the Amended Motion to be assessed, the likely quantification of recoverable costs would be in the order of $13,525.60, including tax. The plaintiff seeks an order that the defendants pay to the plaintiff the lesser sum of $13,000.00 as compensation for the costs incurred by the plaintiff in defending the amended stay motion, without need for a costs assessment to take place.

8. [8]

   Mr Zhu has annexed relevant documentary evidence to his affidavit supporting the amount claimed.

9. [9]

   In submissions filed in support of the special costs order, the plaintiff / respondent submits that a gross sum order is a simple and effective means of ensuring that its costs are paid, without incurring the additional costs and delay associated with a formal assessment, costs that would be disproportionate to the amount claimed. It is argued that the prospects of recovering the costs of an assessment process are limited, and this too militates in favour of a gross sum order.

10. [10]

    The plaintiff also points to the nature of the proceedings that the defendants placed before the Court, it being an attempt to re-litigate a matter already determined by the Court in December 2020, where there was no proper basis for reconsideration of the earlier decision.

Determination

1. [11]

   For the reasons identified in submission by counsel for the plaintiff / respondent, I propose to make an order for gross sum costs payable by the defendants to the plaintiff.

2. [12]

   Section 98 of the Civil Procedure Act 2005 (NSW) provides a broad discretion to the Court to make an order for costs. Section 98(4)(c) provides for a court to make an order for a specified gross sum instead of assessed costs. In Hamod v State of New South Wales and Anor [2011] NSWCA 375 the Court of Appeal (per Beazley JA with whom Giles JA and Whealey JA agreed) considered the circumstances in which it might be appropriate to make such an order, at [813] – [820]:

3. [13]

   On the evidence, I am satisfied that the prospect of any recovery from the defendants of the costs involved in a formal costs assessment, if required, is limited. It appears that the defendants have not made any payments towards the judgment debt or previous costs orders made by this Court, and there is no reason to conclude that the situation will be different with respect to a usual costs order relevant to this most recent application. The plaintiff would thus be disadvantaged by an order requiring a costs assessment in circumstances where the prospects of recovery against the defendants may be remote.

4. [14]

   The sum sought is established by appropriate evidence, and it incorporates a modest discount.

5. [15]

   Significantly, that the plaintiff has incurred these costs at all is wholly attributable to the defendants’ conduct of the matter. Simply stated, the Amended Motion argued on 21 June 2021 should not have been brought. It did no more than ask one judge of the Common Law Division to review the decision of another judge of the Common Law Division, where there was no evidence of any material change in circumstances, and where appellate proceedings were already on foot in the Court of Appeal concerning the substantive judgment. The plaintiff / respondent was needlessly put to the costs of defending an action which had no prospects of success.

6. [16]

   That feature, coupled with those other matters to which I have referred, is determinative of the application in my view.

Orders

1. [17]

   The orders that the Court makes are:

   1. (1)

      Order 2 of 15 June 2021 is vacated;

   2. (2)

      In lieu, the defendants are to pay the plaintiff a gross sum of $13,000 as costs of the proceedings with respect to the Amended Notice of Motion filed on 26 May 2021.