Huang v Drumm

After delivery of judgment on the summons filed by Biru Huang (the plaintiff) on 14 July 2017, in the substantive proceedings (Huang v Drumm [2017] NSWSC 949) Bernard Drumm (the defendant) applied for an order that the costs ordered to be paid to him by the plaintiff be paid on a higher basis (ordinary basis to 21 June 2017 and on an indemnity basis thereafter) and that they be fixed in the sum of $11,070 under s 98(4)(c) of the Civil Procedure Act 2005 (NSW).

I made directions for the filing and service of submissions and evidence. The defendant has served an affidavit of Nicholas Cohen, the defendant’s solicitor, sworn 18 July 2017, and submissions prepared by Mr Elliott, who appeared at the substantive hearing on behalf of the defendant. The defendant also relied on a letter dated 21 June 2017 in which Mr Cohen set out, in detail, the reasons why he contended that the plaintiff’s claim for relief would fail. These reasons were reflected in the submissions made on behalf of the defendant at the substantive hearing, which were, in substance, accepted and led to the dismissal of the summons and the costs order against the plaintiff. The letter concluded:

Mr Cohen wrote to the plaintiff again on 10 July 2017 and drew to her attention her obligation to file and serve an affidavit annexing documents from the Local Court proceedings in accordance with r 50.14 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR). He reiterated his invitation from his earlier letter that she withdraw her appeal and the summons be dismissed “to avoid further unnecessary costs being incurred”. Once again, Mr Cohen foreshadowed an application for costs on an indemnity basis.

On the hearing of the substantive application for relief, the defendant read an affidavit of Mr Cohen sworn 11 July 2017, to which were exhibited the documents referred to in UCPR r 50.14, the plaintiff was obliged to provide, but had not provided, to the Court.

The plaintiff has not filed any evidence or submissions in response. Accordingly I shall proceed to determine the defendant’s application on the basis of his evidence and submissions.

For the reasons given in my substantive judgment, the plaintiff’s claim was doomed to fail. The defendant made an offer, on which he was entitled to rely, which contained a material element of compromise since he offered not to seek the costs incurred in these proceedings to the date of the letter, 21 June 2017. Although the summons had only been filed on 13 June 2017, Mr Cohen’s letter contained a detailed analysis of the relevant principles by reference to the provisions of the Local Court Act 2007 (NSW) and the relevant authorities, as well as detailed factual submissions as to why the relief claimed in the summons would not be granted.

The defendant’s offer was a reasonable one. It was unreasonable of the plaintiff not to accept it. Her refusal to accept the offer meant that the defendant was obliged to incur the costs of the hearing. As referred to above, the defendant also incurred costs which ought to have been incurred by the plaintiff in that, once it became apparent that the plaintiff did not propose to comply with her obligation under UCPR r 50.14, Mr Cohen assembled the necessary documents and prepared an affidavit so that this Court would have what was required to determine the issues raised by the summons.

In these circumstances I am persuaded that it is appropriate to order that the plaintiff pay the defendant’s costs on an ordinary basis up to and including 21 June 2017 and on an indemnity basis thereafter.

The relevant principles for awarding a gross sum for costs were articulated by the Court of Appeal (Beazley P, Meagher and Payne JJA) in Bechara (t/as Bechara and Co) v Bates [2016] NSWCA 294 in the following passage:

The costs incurred by these proceedings are disproportionate to the result in that the proceedings which were the subject of the summons are Local Court proceedings. The order which was challenged was an interlocutory order made by a magistrate in the course of the hearing, which has not yet concluded. The plaintiff’s excursion to this Court has been both futile (as she has lost) and expensive for the defendant (since he was represented). I am satisfied that the detail in the invoices annexed to Mr Cohen’s affidavit provide sufficient material to determine an appropriate sum. The discount of 20% for solicitor’s fees is reasonable for an application such as the present, having regard to the charge-out rates of Mr Cohen, which I regard as reasonable for such a matter. In addition, as referred to above, I consider that the plaintiff unnecessarily contributed to the costs incurred by the defendant by failing to comply with her obligations, as plaintiff, under the UCPR, which had the effect that the defendant’s legal representatives felt obliged to provide the material to the Court so that the matter could be heard and determined on the basis of the necessary material.

It is also of significance that the plaintiff has not sought to be heard against the applications for gross sum costs orders. In all the circumstances I am persuaded that it is appropriate to make gross sum costs orders as sought. As I am to take a “broad-brush” approach, I have rounded down the amount sought to the nearest thousand dollars.

I am satisfied that it is appropriate that the costs of these applications for gross sum costs orders ought follow the event.

I make the following orders: