Riva NSW Pty Ltd v Mark A Fraser and Christopher P Clancy trading as Fraser Clancy Lawyers (No 4)

1. [1]

   LEEMING JA: By notice of motion filed on 4 October 2018, although dated 26 September 2018, Mark A Fraser and Christopher P Clancy, who trade as Fraser Clancy Lawyers, seek a variety of special costs orders, as well as an extension of time. The orders sought are as follows:

Background

1. [2]

   It is necessary to say something of the four sets of costs in respect of which gross sum costs orders and indemnity orders are sought. I shall follow the order of Fraser Clancy’s motion.

2. [3]

   First, the Judicial Review proceedings filed on 6 September 2017 were proceedings brought by Riva seeking judicial review of a decision of the District Court made the previous month. They were the subject of Fraser Clancy’s application for security for costs, which was ordered by Simpson JA on 22 March 2018: [2018] NSWCA 53. The proceedings were dismissed following the failure to provide the security ordered within the time provided. Fraser Clancy’s notice of motion for security for costs was filed on 19 December 2017. It is not clear what work was done prior to the filing of Fraser Clancy’s motion for security; I return to this below.

3. [4]

   Fraser Clancy says that its “actual” costs for the Judicial Review proceedings are $37,193. That amount excludes the costs of its successful motion for security, which are the subject of paragraph 1(b) of Fraser Clancy’s notice of motion.

4. [5]

   Secondly, Fraser Clancy’s application for security for its costs of the judicial review proceedings was made on 19 December 2017. The motion was determined, favourably to it, on 22 March 2018, with an order that Riva pay the firm’s “costs of and incidental to this application for security for costs”. It was supported by an affidavit and written submissions. Junior counsel appeared for Fraser Clancy before Simpson JA.

5. [6]

   Fraser Clancy says that its “actual” costs of the motion are $46,260.

6. [7]

   Thirdly, Riva applied to vary the orders made by Simpson JA, which application came before the Court of Appeal constituted by Gleeson JA, Emmett AJA and me on 17 August 2018: [2018] NSWCA 186. Riva’s application was dismissed. The Court made the following orders:

7. [8]

   The Court addressed the costs of the 2017 Judicial Review proceedings in terms at [34]:

8. [9]

   Fraser Clancy now says that its “actual” costs of that application are $52,568.

9. [10]

   Fourthly, there is the current notice of motion, which has not as yet even been determined favourably to Fraser Clancy, let alone on a basis that warrants indemnity costs.

10. [11]

    Nonetheless, Fraser Clancy estimates its costs of that application, as at 9 November, at $41,776. That figure does not include future costs. Mr Clancy further estimates (para 105) additional costs of one day’s preparation from junior counsel ($3,850) and 12 hours of his own time to review Riva’s affidavits and submissions and settle a response ($7,260).

Concerns about Fraser Clancy’s costs

1. [12]

   First, the four dollar figures summarised above are taken directly from Mr Clancy’s affidavit sworn on 9 November 2018 (para 77 and annexure “A”). Importantly, the four costs figures referred to above, which add to $177,797, are wholly comprised of costs reflecting time charged by Mr Clancy or solicitors employed by his firm. Despite Mr Clancy deposing to these costs being “actual”, they are in fact nothing more than the time which has been costed in the firm’s timesheet.

2. [13]

   That is to say, the figure of $177,797 does not comprise any costs which, so far as the evidence discloses, have actually been paid by the firm – in respect of funds have been transferred from the firm’s account. To the contrary. Fraser Clancy has chosen to represent itself, and has kept a record of the time it says has been incurred in this litigation. The firm’s entitlement to be compensated rests on the so-called Chorley exception, described by Mason CJ, Brennan, Deane, Dawson and McHugh JJ in Cachia v Hanes (1994) 179 CLR 403; [1994] HCA 14 as “somewhat anomalous” (at 411) and “limited and questionable” (at 413).

3. [14]

   For the purposes of this application, I proceed on the basis that Fraser Clancy is entitled to be treated as if it had paid real money to a separate firm of solicitors which was providing legal services to it. However, I decline to use Mr Clancy’s language of “actual” costs for the amounts which have been run up in its timesheets.

4. [15]

   Secondly, the overwhelming majority of the firm’s costs represent time incurred by Mr Clancy personally, at a rate of $550 per hour (exclusive of GST). Of the total of $161,633.95, Mr Clancy contributes $143,079.75, which is in excess of 88%. A small amount of work has been done by an employed solicitor of 4 years experience, a legal clerk with 40 years’ experience and a law clerk with 1½ years experience. It is unusual for such a high proportion of work to be done by a partner.

5. [16]

   Thirdly, Fraser Clancy’s timesheets do not include GST. Mr Clancy has chosen to add 10% to the costs his firm claims. He explains why in paragraph 58 of his affidavit. That paragraph includes this sentence:

6. [17]

   “FCL” is defined as “Fraser Clancy (Partnership)”. It is far from clear that Fraser Clancy makes a taxable supply to itself when a partner or employed solicitor spends time working on this litigation. It is also unclear to me how on the one hand Fraser Clancy can practise law and provide what it says are hundreds of thousands of dollars of legal services in the firm’s defence, and on the other hand say that it is not trading and incurring the usual expenses (including GST) such as electricity, paper and not least counsel’s fees. However, because I have concluded that the GST treatment of Fraser Clancy’s costs is immaterial to the outcome of this motion, I take the matter no further.

7. [18]

   Fourthly, there have also been disbursements, notably for counsel. Counsel’s fees are said by Mr Clancy to be $30,581.75, and there are other disbursements in amounts of $1,021, $2,355 and $4,390. Annexure “A” to Mr Clancy’s affidavit (where those figures are found) does not allocate counsel’s fees between each of the four applications.

8. [19]

   Mr Clancy has exhibited counsel’s fee notes dated 15 November 2017, 12 December 2017 and 23 October 2018. It may readily be seen that none of those costs are referable to the current motion, and none or virtually none are attributable to the judicial review proceedings (ie excluding the motion for security for costs). Even the entries in later 2017 mostly appear to relate to security for costs. Counsel’s costs are, predictably, divided between the two short applications in Court, before Simpson JA on 22 March and on review on 9 August.

9. [20]

   The other disbursements are identified on p 25 of the time sheet, which is the first document in Mr Clancy’s unpaginated (and lengthy) exhibit. The $1,021 represents a filing fee, the cost of transcripts, a car park fee and a bankruptcy register search. An amount of $1,430.40 for photocopying contributes to the $4,390. I cannot fully reconcile the remaining disbursements. However, under a heading “Include on Account?” is an entry “Telephone, postage & sundries – 2% of our fees”, and there follows amounts of $2,960 and $296 GST. There is another row with a very similar description, although this time it is said that the “2.00% of our fees” is $3,232.68 and $323.27 GST. Since that entry is based upon a percentage of Fraser Clancy’s entire billed time, it is difficult to see how the additional amount of $2,960 is derived.

10. [21]

    The explanation for the entries may be that Mr Clancy says, in paragraphs 82-83, that he has reduced the 2% surcharge somewhat. He says that he has claimed 1% on the ordinary basis and 2% on the indemnity basis.

11. [22]

    Assuming that is so, the firm’s costing for this matter includes thousands of dollars which are no more than a moderately arbitrary percentage surcharge on its fees. I see no reason why there should be a 1% or 2% (which, in the case of Mr Clancy’s rates translates to an additional more than $5 or $10 per hour) for unspecified expenses connected with the litigation which are too small economically to record. It is one thing to establish a case for a surcharge in the case of a particular firm; it is another to say that since one firm (whose structure may be quite different from that of Fraser Clancy) is able to justify a 1% or 2% surcharge for sundry items, Fraser Clancy is entitled to claim the same surcharge in an assessment or a claim for a gross-sum costs order.

12. [23]

    Fifthly, there is no independent evidence of what would be the outcome on assessment of all of this legal activity. There is, for example, no evidence from a costs assessor who has examined the file and the time records.

13. [24]

    Mr Clancy has taken a different approach. He says that he is an experienced solicitor. He says that he is able to say that the work involved “a reasonable level of legal complexity” and that “each motion has involved extensive legal and factual argument” (paras 60 and 64). He says that since Fraser Clancy acted for itself, there were no solicitor client costs. He also says that since its billing is accurate to quarter units of 90 seconds, rather than the more familiar 6 minutes, that is a reason why “only a small reduction, if any, should be made by the Court to our professional costs to allow for any work which the Court may consider exceeds what may be reasonable on a broad-brush gross sum assessment approach” (para 75).

14. [25]

    Although Mr Clancy has prepared a very long affidavit, the ultimate methodology is straightforward. He says that given there are no solicitor client costs, 90-95% of the work in the timesheet would be considered reasonable on a party/party costs assessment, and 95-100% would be allowed on an indemnity basis.

15. [26]

    Fraser Clancy therefore contends that the costs and disbursements have been $227,365. It seeks a gross sum order in its favour of $217,085–$227,245 if costs are ordered on an indemnity basis, and one in the order of $195,849–$208,034 if an order is made on the ordinary basis.

16. [27]

    Prima facie, something has gone badly wrong with the way in which Fraser Clancy maintains it is entitled to costs in its favour. There have been two contested hearings, one for security for costs, one to vary the order for security for costs. The first was completed by 2.45pm; the second was completed before the luncheon adjournment. Neither was especially complex. Riva lost both applications. But I cannot conceive how Fraser Clancy could possibly thereby become entitled to costs in excess of $200,000 from its success. I should make clear immediately that the overwhelming majority of those costs are costs “incurred” by Fraser Clancy; nothing in this judgment is to be read as expressing any view on counsels’ fees (which are in the order of one sixth of Fraser Clancy’s costs) as being unreasonable.

17. [28]

    Costs should be proportionate to the importance and complexity of the subject-matter in dispute: Civil Procedure Act, s 60. Gleeson JA said that “the entitlement of parties to justice is not unconditional and must have regard to a number of factors, including the proportionality of the costs involved to the amount in dispute”: Council of the City of Botany Bay v Michos [2013] NSWCA 244 at [31], in a passage endorsed in Zepinic v Chateau Constructions (Aust) Ltd (No 2) [2014] NSWCA 99 at [33]. It is especially concerning that in this case (as in Zepinic v Chateau Constructions) that so much time could be said to have been spent by Fraser Clancy on an application to improve Fraser Clancy’s costs entitlement.

18. [29]

    Riva submits that:

19. [30]

    In response, Fraser Clancy contends that, in the absence of any evidence or even submission as to any unreasonableness of any particular item of work, “this Court should reject outright Riva’s submissions”. The firm says that “[t]he costs are not enormous and they are proportionate to the work required to rebuff Riva’s Motion to vary and the appeal and to pursue a security of costs order as well as the large amount of work which FCL was required to do at Riva’s request and so this Court was not embarrassed by absence of documents on Riva’s Motions” (reply submissions, paragraph 29).

20. [31]

    It is as well to reiterate what was said in Zepinic at [36]:

21. [32]

    I find it very hard to reconcile the time recorded in Fraser Clancy’s timesheets with what was reasonably necessary for the litigation. I say that fully bearing in mind that it can be difficult when responding to a determined litigant such as Riva and those who control it. I do not consider that all of the excess that has occurred in the litigation between these parties has been the fault of Riva. One small matter is suggestive: Fraser Clancy’s written submissions in reply (signed by, and I would infer from their style also drafted by, Mr Clancy) occupy 41 paragraphs over 10 pages excluding annexures. They purport to be in reply to Riva’s submissions of 17 paragraphs over 4 pages. Reply submissions should seldom exceed the length of the submissions to which they are made in reply. Fraser Clancy’s reply submissions are 2 ½ times as long.

22. [33]

    However, in light of the timing of Fraser Clancy’s application and the limitations on this Court’s jurisdiction to accede to it, it is not necessary to resolve the dispute as to quantum.

Jurisdiction

1. [34]

   The favourable costs orders obtained by Fraser Clancy were in judgments whose cover sheets included the following prominent note:

2. [35]

   Further, the judicial review proceedings were dismissed in April 2018, following non-payment of security, pursuant to the automatic operation of the order sought and obtained by Fraser Clancy.

3. [36]

   Fraser Clancy’s notice of motion was only filed on 4 October 2018. That is more than seven months after the 22 March 2018 order for costs, more than six months after the judicial review proceedings were dismissed, and some seven weeks after the notice of motion seeking review of Simpson JA’s orders was dismissed with costs.

4. [37]

   UCPR r 36.16, consistently with the note on judgments published by this Court, provides as follows:

5. [38]

   Prayer three of Fraser Clancy’s notice of motion seeks an extension of time. Although Fraser Clancy’s submissions in support of the various orders sought by it occupy 30 pages (and 128 paragraphs) together with a 15 page (and 78 paragraph) chronology, very little is said about the extension for time. Paragraphs 124 and 125 are in fact the only paragraphs which address the extension which is sought. After asserting that Riva should have consented to pay Fraser Clancy’s costs of the judicial review proceedings, and to pay gross sum costs orders of each of the four applications in its motion, the submission goes on to claim:

6. [39]

   In paragraph 125, Fraser Clancy refer to letters written by it to Riva on 24 and 27 August 2018 requesting its consent to one or more of the orders sought on the motion, to which Riva did not respond.

7. [40]

   In Fraser Clancy’s chronology, once again there is only a single entry relating to the extension of time. It is said that “On 20 August 2018, FCL requested this Court list FCL’s Amended Motion seeking a gross sum costs order and indemnity costs for hearing”.

8. [41]

   Riva opposed any extension of time. It submitted:

9. [42]

   In reply, Fraser Clancy stated that it first wrote to the Court seeking separate orders in relation to costs on 6 April 2018. That submission annexed a letter dated 6 April 2018. The submission continued:

10. [43]

    The letter of 29 August was also attached to the submissions in reply.

11. [44]

    As will be seen below, Fraser Clancy appears to be under the misapprehension that an application to vary an existing order, or to apply for a further order, may be made by letter to the Registrar, copied to the solicitor for the other side. That is not so.

12. [45]

    UCPR r 18.2 is as follows:

13. [46]

    None of the exceptions is applicable. It follows that no application has been made within the time mandated by r 36.16 to vary the costs orders made on 22 March or 17 August 2018. The position is not dissimilar to what was held in Aukuso v Tahan [No 2] [2018] NSWCA 302 at [20]–[23], rejecting the proposition that emails to the Registrar constituted substantial compliance with r 36.16. As Simpson AJA said at [22], referring to r 36.16, “[t]hat subrule is specific in requiring a notice of motion; an email is not substantial compliance with such a requirement.” I return to this below, because it is dispositive of paragraphs 1(b) and (c) of the notice of motion. However, in light of the fact that Fraser Clancy appears to have a different view, it is as well to summarise what occurred.

14. [47]

    Fraser Clancy’s letter dated 6 April 2018 was in the following terms:

15. [48]

    That letter did not apply for costs, even informally. It advised of a “wish” to seek orders in relation to the costs of the motion. More importantly, and in any event, no further steps were taken in relation to vary the costs order made by Simpson JA for more than six months. True it is that in the meantime Riva was itself seeking to vary the substantive order made by Simpson JA. However, I do not see that that fact entitled Fraser Clancy to defer making its application until October, to vary an order made in its favour on 22 March 2018. So far as the evidence discloses, Fraser Clancy left the matter in abeyance for the following four months.

16. [49]

    In particular, not lightly would I accede to any proposition that a party may write a letter to the Registrar within 14 days of making an order flagging an intention to vary it, and then renew that application many months later, at a time convenient to it, disregarding the time limits for variation of orders and the fundamental principle of finality.

17. [50]

    I do not understand the reference in Fraser Clancy’s chronology to 20 August 2018 (it may be a typographical error for 29 August, which date does not otherwise appear). Fraser Clancy’s letters of 24 and 27 August take the matter no further than its letter of 29 August 2018 to the Registrar, which was as follows:

18. [51]

    Contrary to the second paragraph of that letter, there has not been compliance with UCPR r 36.16(3A). Applications are to be made by notice of motion, save in the circumstances specified in r 18.2.

19. [52]

    Further, notwithstanding that the letter said that it enclosed a notice of motion, seemingly it did not do so.

20. [53]

    The matter received the attention of the Registrar on 31 August 2018 (perhaps only electronically; the evidence as to this is not clear), who ordered:

21. [54]

    Two things should be noted about that order. First, the extension did not purport to apply to any application which might be made to vary the costs order made on 22 March 2018. Secondly, and in any event, despite seeking extra time and being given until 7 September 2018, Fraser Clancy still made no application within the extended time ordered by the Registrar.

22. [55]

    By letter dated 26 September 2018, Fraser Clancy wrote once again to the Registrar:

23. [56]

    It is unclear whether a motion was enclosed with that letter. Fraser Clancy moves on a motion dated 26 September 2018, but only filed on 4 October 2018.

24. [57]

    Fraser Clancy thus asserts that no extension of time is needed for the orders that the firm’s costs in relation to the 22 March and the 17 August 2018 orders be assessed on a gross sum and on an indemnity basis, and alternatively applies for an extension of time.

25. [58]

    The assertion is incorrect, and the application for an extension of time should be refused.

26. [59]

    Fraser Clancy’s letter contends that an order for a gross sum costs assessment is “not seeking to set aside or vary any order”, but rather “is seeking a new order”. I disagree. The extant costs order made on 22 March and 17 August 2018 entitle a party to apply for assessment (ultimately, by filing an application which will come before a costs assessor who will determine, on the ordinary basis, an amount of party/party costs to which the firm is entitled). The order which is sought, namely, that Fraser Clancy’s costs be paid on an indemnity basis would, if made, give rise to different rights as between the firm and Riva. The assessment would be determined on a different basis, and would yield a certificate in a different amount. The two orders (namely, that Riva pay Fraser Clancy’s costs on an ordinary basis, and on an indemnity basis) are mutually inconsistent. It is quite plain that the application for an indemnity costs order is one to set aside or vary an existing costs order.

27. [60]

    Aside from principle, a deal of authority is to the same effect: see for example AT v Commissioner of Police, NSW (No 2) [2010] NSWCA 337. Indeed, many occasions when parties have applied to vary or set aside orders have been cases where special costs orders have been sought.

28. [61]

    The same is true, even more clearly, for the application for a gross-sum costs order. Such an order supplants the assessment regime, and permits a person to proceed to execution directly. Plainly that too is an application to set aside or vary an existing costs order.

29. [62]

    Both applications are governed by r 36.16.

30. [63]

    No application was made within the 14 days mandated by r 36.16 after the orders on 22 March or 17 August 2018. In response to a request made by Fraser Clancy in August 2018, the firm gained until 7 September 2018 to make its application. However, no application was made within that extended time. Indeed, no application was made by notice of motion, in accordance with UCPR r 18.2, until 4 October 2018.

31. [64]

    There is no power under r 36.16 to extend the time so as to permit paragraphs 1(b) and (c) of Fraser Clancy’s notice of motion to be made. They must be dismissed.

32. [65]

    I note that Riva does not oppose an application being made for costs of the Judicial Review proceedings, which has not been determined on the merits and which was dismissed in April 2018 following the failure to provide security. I shall address this application below.

33. [66]

    For completeness, I note that no application has been made by Fraser Clancy, either in its notice of motion, or in response to Riva’s reliance on r 36.16, to dispense with the rule pursuant to s 14 of the Civil Procedure Act 2005 (NSW). In the circumstances of this application, where so much effort has already seemingly been deployed without attending to what may be regarded as basic elements of practice, I doubt that I should even consider whether it is appropriate to dispense with the requirements of the rules in circumstances where no application has been made to do so. Certainly, if I were minded to accede to it, I would not do so without first hearing from Riva.

34. [67]

    However, were I to ask whether it was appropriate to dispense with the rules, I would answer negatively. I think it is sufficient to focus upon the five week period from 31 August 2018 until 4 October 2018. At that time, Fraser Clancy must have known that there was a time limit for making applications to vary or set aside costs orders. Even if no one had read the note on the Court’s judgments, the firm had sought and obtained an extension from the Registrar until 7 September 2018. That day came and went. The time sheets show continuing activity from Mr Clancy on 12 September (“draw completely new submissions on costs of the proceedings generally and indemnity costs of the Motion for security and gross sum costs order” – which incidentally is eloquent testimony to the inefficiency of the process adopted within the firm) and later days. There is simply no explanation – save for a sentence in the firm’s letter of 26 September 2018 – for why the extended deadline came and went. And even then it took more than another week for the firm to file a notice of motion.

35. [68]

    It is to be borne in mind that this is an application for the firm to receive the benefit of a gross sum costs order, in a large amount of money, referable to rates charged for the service of Mr Clancy at $550 per hour exclusive of GST. More would need to be done than include a sentence in a letter saying it was an oversight in order to warrant a dispensation from the rules of Court. I do not consider it is “appropriate” to dispense Fraser Clancy from compliance with rules, even had it made application to do so, in those circumstances.

36. [69]

    Finally, anticipating what follows, even if an application had been made under s 14, and even if I had otherwise been minded to acceded to it, the evidence in support of a gross-sum costs order is not such as to persuade me that one should be made. That is for substantially the same reasons as are disclosed in dealing with paragraph 1(a) of Fraser Clancy’s notice of motion, to which I now return.

The costs of the Judicial Review proceedings (excluding the security for costs application)

1. [70]

   Unlike the orders made on 22 March and 17 August 2018, in this case Fraser Clancy does not seek to vary or set aside any existing costs order. Nor does Riva oppose the application being made. I am satisfied there is power to make orders as to Fraser Clancy’s costs of judicial review proceedings brought by Riva insofar as those costs fall outside the extant costs order on Fraser Clancy’s notice of motion.

2. [71]

   Although the proceedings have not been determined on their merits, costs prima facie follow the event. Riva makes no submission against that course, although it opposes costs on an indemnity basis and on a gross sum basis.

3. [72]

   I am not satisfied that the litigation commenced by Riva, promptly in September 2017 after the dismissal of its application by the District Court the previous month, was an abuse of process. I reach that view for the following reasons.

   1. (1)

      First, with the benefit of the hearing on 10 December 2018, I cannot disregard the concession by counsel for Fraser Clancy that it was reasonably arguable that the District Court had no jurisdiction to make a post-judgment freezing order against a trustee, in circumstances where execution (say, by the appointment of a receiver) cannot be effected by that Court. Indeed, I regard the concession as having been rightly made.

   2. (2)

      Secondly, Fraser Clancy did not apply for the proceedings to be struck out as an abuse of process. To the contrary, that firm’s response was to seek security for its costs of defending the litigation on its merits, and in the amount of $70,000. That stance may not be strictly inconsistent with a claim that the application was an abuse of process, but it certainly sits ill with such a claim.

   3. (3)

      Thirdly, I am unpersuaded by Fraser Clancy’s submissions to the contrary. These fall into two categories: Fraser Clancy’s specific submissions on “why Riva should pay costs of judicial review proceedings generally on an indemnity basis” (paragraphs 80-82) and the firm’s “general reasons” (paragraph 27). I address each in turn.

   4. (4)

      The specific submissions highlight the similarity between the application and the proceeding which was summarily dismissed by Emmett JA in October 2014. Fraser Clancy says that a review should have been sought of Emmett JA’s decision, rather than fresh proceedings brought, leading to the inference that “Riva pursued this appeal merely to frustrate and delay FCL’s enforcement”. Fraser Clancy also says that the judicial review application is “inherently inconsistent with Riva’s Supreme Court Damages Claim (which impliedly relies upon the District Court having jurisdiction to make the order)”. I think the short answer is that the limitations on the power of the District Court to grant post-judgment Mareva relief in relation to the necessarily equitable execution against a trustee were never pointed out to Emmett JA (I note different counsel then appeared for Riva) and if that is so, that tends against there being an abuse. I do not for my part see an inherent inconsistency between an absence of jurisdiction and the making of a claim for damages for an injunction which should not have issued; an order of an inferior court beyond jurisdiction may be a nullity in law (for example, for the purposes of contempt), but it does not follow that it cannot cause harm. Once again, Fraser Clancy’s concession that the point is reasonably arguable tells against the inference that Riva’s sole or predominant motive was for an improper purpose.

   5. (5)

      Fraser Clancy submits by way of its “general reasons” that Riva’s applications were “hopeless and vexatious” (para 27(iv); I disagree, and note the firm’s counsel’s concession on 10 December to the contrary. Fraser Clancy says that the application was an abuse given the clear wording of UCPR rr 25.11 and 25.14 (para 27(vi)); that is no answer to the difficulty of execution of a judgment against a trustee by the District Court. Fraser Clancy submits that Riva “has acted unconscionably and in contempt of this Court since 2014” and “Riva has also been in contempt of the District Court in refusing to pay its judgments since August 2012 and 20 December 2013”; I disagree, for it is not a contempt to fail to pay a judgment debt.

   6. (6)

      I am conscious that Fraser Clancy points more broadly to statements made by Mr Ferella that he “does not propose to pay FCL” and more serious statements about what is said to have been Riva’s contempt in failing to produce documents, that the proceedings commenced by it have occurred in circumstances described as “vexatious” and “involved bad faith”. I do not think that I should properly use these findings to lead to an indemnity costs order in respect of separate proceedings, conceded to be reasonably arguable.

4. [73]

   However, I should be willing to accede to a gross sum costs order, because the parties to this litigation have shown an unrestrained capacity to engage in dispute, including over minutiae. Section 98(4) of the Civil Procedure Act authorises the Court to make an order to the effect that the party to whom costs are to be paid is to be entitled to “a specified gross sum instead of assessed costs”. The principles relevant to the exercise of the Court's discretion were stated by Beazley JA in Hamod v State of New South Wales [2011] NSWCA 375 at [813]–[820]. Presently apposite is her Honour’s statement at [819]:

5. [74]

   The difficulty faced by Fraser Clancy is similar to that identified in Colquhoun v District Court of New South Wales (No 2) [2015] NSWCA 54, where there was a similar lack of evidence. This Court said at [6]–[7]:

6. [75]

   True it is that the time sheets show the timing of the costs incurred, and the hourly rates which were charged.

7. [76]

   However, there is no meaningful evidence as to the amount which would be recoverable on assessment, save that I would conclude that it would be substantially less than the 90%-95% of the total as estimated by Mr Clancy. I say that for these reasons.

8. [77]

   First, Mr Clancy accepts, properly, that his statement as to the 90%-95% in his affidavit is no more than a submission (see 14 December 2018 response to objections to affidavit at para 99).

9. [78]

   Secondly, there is no expert evidence as to what would, in the facts of this litigation, be recoverable were Fraser Clancy’s costs be sent to assessment. Accepting for present purposes that Mr Clancy were able to give the evidence to which he deposes as to the ordinary processes of assessment, I do not regard the facts of this litigation including the costs said to have been incurred as anything like ordinary. In particular, Fraser Clancy was told by its counsel immediately upon receipt of the application that security should be sought. Counsel’s first fee note records, in a conference on 18 September 2017, “we need security for costs, collateral attack on previous NSWCA decision”. Security for costs applications should almost always be brought promptly. To the extent that a defendant delays doing so, and incurs costs which then fall outside the security obtained, it is far from clear to me that a costs assessor would regard those costs as reasonably incurred. Rather, those costs should have been deferred until the question of security had been resolved.

10. [79]

    Thirdly, Mr Clancy is in an intricately conflicted position. He is an expert witness, a principal actor, an advocate and a beneficiary. He seeks to give expert opinion evidence as to the outcome of an assessment of the costs in this litigation. More than 88% of those costs were incurred by him personally. He is the author of the submissions made in support of the application. And all of those costs, so far as the evidence discloses, are merely time records, rather than costs for which a separate client seeks a partial indemnity. In other words, any gross sum costs order made on Mr Clancy’s application will not serve to relieve in part the burden of that firm’s costs upon its client. It will go directly to the revenue of the firm. Mr Clancy is thus the main actor, a pecuniary beneficiary and the man who has signed the firm’s submissions, who also seeks to give the benefit of an expert opinion. I mean no disrespect, but that is not a satisfactory way to adduce probative evidence of the likely outcome of the firm’s billings if they went to assessment.

11. [80]

    Fourthly, the amounts are too high. Take the costs of the present application for special costs orders. Mr Clancy said that it had cost (up until 9 November 2018), no less than $41,776, to which should be added his estimate of counsel’s fees of $3,850 and his own time of $7,260 making a total of $52,886. It is absurd to think that $52,886 could be spent on an application for indemnity costs and gross sum costs orders, where those orders themselves were in the order of $140,000. This is entirely in disregard of the proportionality required to be recognised by s 60 of the Civil Procedure Act.

12. [81]

    The primary materials permit some precision in how the $41,776 is calculated (the balance is merely an estimate). The $41,776 represents the time recorded from 27 August 2018 until 8 November 2018 (which is the day preceding the execution of Mr Clancy's affidavit in support of the application for special costs orders) of $37,978.80, to which has been added 10% claimed for GST. Of the $37,978.80, all save $2,767.80 was time incurred by Mr Clancy personally, which is to say some 93% of all time on the application for special costs orders was the time of a partner, as opposed to the time of a more junior solicitor. It is unclear to me how much of the work should reasonably have been done by a more junior solicitor, but it is certainly substantially more than 7%. Further, the time sheets record Mr Clancy as having personally spent some 64 hours working on the application for special costs orders. Fraser Clancy is right to say that Riva has tendered no evidence to the effect that this was excessive or unreasonable. No evidence is required. Sixty-four hours to generate a notice of motion, supporting affidavit and submissions in support of special costs orders is, with respect, absurdly excessive given the nature of the application.

13. [82]

    This Court refused a gross-sum costs order in South Western Sydney Local Health District v Gould (No 2) [2018] NSWCA 160. Once again, it did so because there was insufficient information, and, to be fair, Fraser Clancy has adduced considerably more information than occurred in that case. The Court refused the application for $90,000, which was said to reflect “slightly more than 60% of the appellant’s actual costs and disbursements incurred at first instance”. My view that Fraser Clancy’s costs are an order of magnitude too high is reinforced by that medical negligence case. There had been a five day trial, with lay and expert testimony, and a series of substantial submissions after judgment was reserved. The contrast is with two short interlocutory applications.

14. [83]

    I am not persuaded that I can soundly exercise the discretion to make a gross sum costs order.

Orders

1. [84]

   Accordingly, I would order that Riva pay Fraser Clancy’s costs of the judicial review proceedings commenced by Riva on 6 September 2017, noting that the order excludes the costs of Fraser Clancy’s notice of motion for security for costs filed 19 December 2017 for which costs were ordered on 22 March 2018. I would not order that those costs be paid on an indemnity basis. I would not alter the orders made on 22 March and 17 August 2018.

2. [85]

   It follows that Fraser Clancy has in substance failed on its notice of motion. I do not consider that it should be entitled to its costs of its notice of motion, let alone indemnity costs assessed on a gross-sum basis. However, Fraser Clancy has emerged with a costs order to which it was not previously entitled, which, although it was not opposed by Riva, was not consented to.

3. [86]

   In all the circumstances, I think there should be no order as to the costs of the notice of motion filed 4 October 2018.

4. [87]

   In reaching that conclusion, I have principally relied upon the time sheets and counsel’s tax invoices, to which no objection was made, and paragraph 99 of Mr Clancy’s affidavit, which was concededly a submission. I should deal with the parties’ objections to that affidavit.

5. [88]

   I reject Riva’s relevance objection to the time sheets and counsel’s tax invoices, and admit the balance of the exhibit subject to relevance. I reject Riva’s relevance objections to paragraphs 5, 14, 20-34. I reject paragraphs 6-11. I admit paragraph 14. I reject paragraph 15. I reject Riva’s objections to paragraphs 20-34. I accept Riva’s submission that paragraphs 35-38 and 41-46 and 48 are no more than submissions. I admit paragraphs 49-55. I treat paragraphs 56 and 57 as submissions. I admit paragraphs 58-64. I treat paragraphs 65-67 and 69 as submissions. I reject paragraph 68. I admit paragraphs 70 and 71 and 73-74. I treat paragraphs 75 and 78-79 as submissions. I reject paragraph 81. I admit paragraphs 82 and 83. I treat paragraphs 84-88 and 89-92 as submissions. I admit paragraphs 94 and 95. I treat paragraphs 97-99 as submissions. I admit paragraph 100. I treat paragraphs 101-103 as submissions. I admit paragraphs 104-106. I treat paragraphs 107 and 109-111 as submissions.

6. [89]

   I make the following orders: